Sunteți pe pagina 1din 417

CORPORATE GOVERNANCE AND

SHAREHOLDER EMPOWERMENT

HEARING
BEFORE THE

SUBCOMMITTEE ON CAPITAL MARKETS,


INSURANCE, AND GOVERNMENT
SPONSORED ENTERPRISES
OF THE

COMMITTEE ON FINANCIAL SERVICES


U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION

APRIL 21, 2010

Printed for the use of the Committee on Financial Services

Serial No. 111125

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00001

Fmt 6011

Sfmt 6011

K:\DOCS\57743.TXT

TERRIE

CORPORATE GOVERNANCE AND SHAREHOLDER EMPOWERMENT

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00002

Fmt 6019

Sfmt 6019

K:\DOCS\57743.TXT

TERRIE

CORPORATE GOVERNANCE AND


SHAREHOLDER EMPOWERMENT

HEARING
BEFORE THE

SUBCOMMITTEE ON CAPITAL MARKETS,


INSURANCE, AND GOVERNMENT
SPONSORED ENTERPRISES
OF THE

COMMITTEE ON FINANCIAL SERVICES


U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION

APRIL 21, 2010

Printed for the use of the Committee on Financial Services

Serial No. 111125

(
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON

57743 PDF

2010

For sale by the Superintendent of Documents, U.S. Government Printing Office


Internet: bookstore.gpo.gov Phone: toll free (866) 5121800; DC area (202) 5121800
Fax: (202) 5122104 Mail: Stop IDCC, Washington, DC 204020001

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00003

Fmt 5011

Sfmt 5011

K:\DOCS\57743.TXT

TERRIE

HOUSE COMMITTEE ON FINANCIAL SERVICES


BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania
MAXINE WATERS, California
CAROLYN B. MALONEY, New York
LUIS V. GUTIERREZ, Illinois
ZQUEZ, New York
NYDIA M. VELA
MELVIN L. WATT, North Carolina
GARY L. ACKERMAN, New York
BRAD SHERMAN, California
GREGORY W. MEEKS, New York
DENNIS MOORE, Kansas
MICHAEL E. CAPUANO, Massachusetts
N HINOJOSA, Texas
RUBE
WM. LACY CLAY, Missouri
CAROLYN MCCARTHY, New York
JOE BACA, California
STEPHEN F. LYNCH, Massachusetts
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
AL GREEN, Texas
EMANUEL CLEAVER, Missouri
MELISSA L. BEAN, Illinois
GWEN MOORE, Wisconsin
PAUL W. HODES, New Hampshire
KEITH ELLISON, Minnesota
RON KLEIN, Florida
CHARLES A. WILSON, Ohio
ED PERLMUTTER, Colorado
JOE DONNELLY, Indiana
BILL FOSTER, Illinois
CARSON, Indiana
ANDRE
JACKIE SPEIER, California
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York

SPENCER BACHUS, Alabama


MICHAEL N. CASTLE, Delaware
PETER T. KING, New York
EDWARD R. ROYCE, California
FRANK D. LUCAS, Oklahoma
RON PAUL, Texas
DONALD A. MANZULLO, Illinois
WALTER B. JONES, JR., North Carolina
JUDY BIGGERT, Illinois
GARY G. MILLER, California
SHELLEY MOORE CAPITO, West Virginia
JEB HENSARLING, Texas
SCOTT GARRETT, New Jersey
J. GRESHAM BARRETT, South Carolina
JIM GERLACH, Pennsylvania
RANDY NEUGEBAUER, Texas
TOM PRICE, Georgia
PATRICK T. MCHENRY, North Carolina
JOHN CAMPBELL, California
ADAM PUTNAM, Florida
MICHELE BACHMANN, Minnesota
KENNY MARCHANT, Texas
THADDEUS G. McCOTTER, Michigan
KEVIN McCARTHY, California
BILL POSEY, Florida
LYNN JENKINS, Kansas
CHRISTOPHER LEE, New York
ERIK PAULSEN, Minnesota
LEONARD LANCE, New Jersey

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel

(II)

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00004

Fmt 5904

Sfmt 5904

K:\DOCS\57743.TXT

TERRIE

SUBCOMMITTEE

ON

CAPITAL MARKETS, INSURANCE,


ENTERPRISES

AND

GOVERNMENT SPONSORED

PAUL E. KANJORSKI, Pennsylvania, Chairman


GARY L. ACKERMAN, New York
BRAD SHERMAN, California
MICHAEL E. CAPUANO, Massachusetts
N HINOJOSA, Texas
RUBE
CAROLYN MCCARTHY, New York
JOE BACA, California
STEPHEN F. LYNCH, Massachusetts
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
ZQUEZ, New York
NYDIA M. VELA
CAROLYN B. MALONEY, New York
MELISSA L. BEAN, Illinois
GWEN MOORE, Wisconsin
PAUL W. HODES, New Hampshire
RON KLEIN, Florida
ED PERLMUTTER, Colorado
JOE DONNELLY, Indiana
CARSON, Indiana
ANDRE
JACKIE SPEIER, California
TRAVIS CHILDERS, Mississippi
CHARLES A. WILSON, Ohio
BILL FOSTER, Illinois
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan

SCOTT GARRETT, New Jersey


TOM PRICE, Georgia
MICHAEL N. CASTLE, Delaware
PETER T. KING, New York
FRANK D. LUCAS, Oklahoma
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
JUDY BIGGERT, Illinois
SHELLEY MOORE CAPITO, West Virginia
JEB HENSARLING, Texas
ADAM PUTNAM, Florida
J. GRESHAM BARRETT, South Carolina
JIM GERLACH, Pennsylvania
JOHN CAMPBELL, California
MICHELE BACHMANN, Minnesota
THADDEUS G. McCOTTER, Michigan
RANDY NEUGEBAUER, Texas
KEVIN McCARTHY, California
BILL POSEY, Florida
LYNN JENKINS, Kansas

(III)

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00005

Fmt 5904

Sfmt 5904

K:\DOCS\57743.TXT

TERRIE

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00006

Fmt 5904

Sfmt 5904

K:\DOCS\57743.TXT

TERRIE

CONTENTS
Page

Hearing held on:


April 21, 2010 ...................................................................................................
Appendix:
April 21, 2010 ...................................................................................................

1
47

WITNESSES
WEDNESDAY, APRIL 21, 2010
Allen, James, Head of Capital Markets Policy, CFA Institute ............................
Brier, Thomas F., Deputy Chief Investment Officer and Director of Corporate
Governance, Pennsylvania State Employees Retirement System ...................
Cutler, Alexander M., Chairman and Chief Executive Officer, Eaton Corporation, on behalf of Business Roundtable ..............................................................
Irwin, Hon. Steven D., Pennsylvania Securities Commissioner, and Chairman,
Federal Legislation Committee, North American Securities Administrators
Association, Inc. (NASAA) ...................................................................................
Rees, Brandon J., Deputy Director, Office of Investment, AFL-CIO ...................
Smith, Gregory W., Chief Operating Officer and General Counsel, Colorado
Public Employees Retirement Association ........................................................
Smith, Robert E., Vice President, Deputy General Counsel, and Assistant
Corporate Secretary, NiSource, Inc., on behalf of the Society of Corporate
Secretaries and Governance Professionals .........................................................

20
12
14
8
16
11
18

APPENDIX
Prepared statements:
Kanjorski, Hon. Paul E. ...................................................................................
Allen, James ......................................................................................................
Brier, Thomas F. ...............................................................................................
Cutler, Alexander M. ........................................................................................
Irwin, Hon. Steven D. ......................................................................................
Rees, Brandon J. ...............................................................................................
Smith, Gregory W. ............................................................................................
Smith, Robert E. ...............................................................................................
ADDITIONAL MATERIAL SUBMITTED

FOR THE

RECORD

Kanjorski, Hon. Paul E.:


Written statement of the Investment Company Institute (ICI) ...................
Written statement of Carl C. Icahn ................................................................
Written statement of Tom Gardner, CEO, The Motley Fool Holdings,
Inc. .................................................................................................................
Castle, Hon. Michael:
Written statement of various undersigned groups ........................................
Hensarling, Hon. Jeb:
Written statement of the Center On Executive Compensation ....................
Allen, James:
Addendums to written testimony ....................................................................
Rees, Brandon J.:
Additional information provided for the record .............................................

(V)

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00007

Fmt 5904

Sfmt 5904

48
49
53
64
300
312
319
339

K:\DOCS\57743.TXT

TERRIE

380
391
396
399
401
407
409

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00008

Fmt 5904

Sfmt 5904

K:\DOCS\57743.TXT

TERRIE

CORPORATE GOVERNANCE AND


SHAREHOLDER EMPOWERMENT
Wednesday, April 21, 2010

U.S. HOUSE OF REPRESENTATIVES,


SUBCOMMITTEE ON CAPITAL MARKETS,
INSURANCE, AND GOVERNMENT
SPONSORED ENTERPRISES,
COMMITTEE ON FINANCIAL SERVICES,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10:04 a.m., in room
2128, Rayburn House Office Building, Hon. Paul E. Kanjorski
[chairman of the subcommittee] presiding.
Members present: Representatives Kanjorski, Sherman, Hinojosa, Baca, Maloney, Bean, Perlmutter, Carson, Adler, Kilroy, Kosmas, Peters; Garrett, Castle, Manzullo, Hensarling, Campbell, and
Jenkins.
Also present: Representative Ellison.
Chairman KANJORSKI. This hearing of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
will come to order.
Pursuant to the committee rules, each side will have 15 minutes
for opening statements. Without objection, all members opening
statements will be made a part of the record.
I ask unanimous consent that Mr. Ellison, a member of the full
Financial Services Committee, be allowed to participate in todays
subcommittee hearing and to offer an opening statement. Without
objection, it is so ordered.
Good morning. Today, we meet to consider several thoughtful
bills that seek by various means to correct the imbalance of power
between investors and management. For far too long at too many
public companies, corporate executives have had the upper hand.
The financial crisis revealed at times vividly and shockingly how
all too frequently corporate management and boards failed to consider the long-term interests of their shareholders. As a result, innocent investors incurred monumental losses, even while corporate
chieftains escaped the inferno unscathed, usually by golden parachute.
It is clear that the deck was stacked, especially when you consider that Wall Street bankers took home enormous paychecks
while the taxpayers got stuck with the bill. We now need to chart
a different course. Congress must act to democratize corporate governance rules so that investors have a greater say in the companies
that they own.
(1)

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00009

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

2
First and foremost, we ought to provide shareholders with easier
means of getting directors nominated. Also, we should act to improve transparency by requiring many institutional investment
managers to disclose how they vote on shareholder proxies.
In the run-up to the crisis, excessive leverage and risk-taking became the norm on Wall Street. These decisions flew in the face of
financial stability and lacked a fundamental level of good judgment. We can fix this problem by requiring public companies to
form independent risk management committees with prescribed
functions and duties.
While the ideas in each of the bills before us are well-intended,
we also need to carefully examine each proposal. As for the appealing idea of separating the role of chairman from that of chief executive officer, we should explore how such a policy will affect small
companies.
Requiring majority voting for uncontested directors also appears
a worthy goal, but we must determine if it could produce inadvertent problems, especially if too few shareholders vote.
As part of last years debates on the Wall Street Reform bill, our
committee has already acted to improve corporate governance laws.
As passed by the House, H.R. 4173 contained important provisions
on proxy access and executive pay. It is my hope that the Senate
will act with all deliberate speed on its reform legislation so that
these important corporate governance reforms can become law.
In the meantime, we must advance the debate about how we can
further enhance corporate governance through increased transparency, better executive accountability, and greater shareholder
rights.
In this regard, I look forward to the testimony today and thank
the witnesses for appearing.
I would also like to thank Congressman Peters, Congressman
Ellison, and Congresswoman Kilroy for their hard work on these
important policy matters.
The gentleman from New Jersey, our ranking member, Mr. Garrett, is recognized for 4 minutes.
Mr. GARRETT. I thank the chairman. I thank all the witnesses
today. An angle that I have taken to consider the multitude of
pieces of legislation and proposals put forward since the recent financial crisis is how do each one of these proposals actually address one of the underlying causes of the financial crisis?
So far, it has not been demonstrated to me convincingly that
broadly speaking, the crisis was a result of corporate governance,
a weakness in corporate governance, and more specifically, I remain to be convinced that the particular proposals put forward in
Congressman Peters bill and the other related proposals would
have either prevented the current crisis or would in fact be a net
positive for corporations going forward.
Just as an aside, philosophically speaking, being the chairman
and founder of the Congressional Constitution Caucus, I am really
hesitant to over turn 150 years of precedent in which corporate
governance has been decided at the State level.
I am also very weary of the Federal Government taking on new
tasks not envisioned by our founding fathers, especially when the

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00010

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

3
States have shown they are basically perfectly capable to address
these situations.
The proposals that are being marketed by the supporters as remedies to the financial crisis, I think we really do need to keep in
mind that they would apply to all companies, all public companies,
big and small, financial and non-financial as well.
Creating this one size-fits-all-mandate, for instance, with a proposal that mandates that every public company have a separate
chairman and CEO, that is really not an appropriate so-called solution for many of the companies out there.
The thing about practical examples of that, some of the great
business leaders in modern times, people like Bill Gates, Warren
Buffett, Sam Walton, they have all held the same role at the same
time and they have done pretty well at it. They created billions of
dollars for shareholder values while also creating literally millions
of jobs for this country.
Most companies, I think, are happy to provide a rationale for
having the same person hold both positions, if that is what the particular board thinks is best for that company.
Again, no mandate that each and every company must separate
the two roles is going to be an appropriate policy solution for every
company. Besides, many of the proposals being put forth are already being adopted, I guess you could say, organically by many of
the companies out there. In some cases, a resounding majority of
the stockholders of the companies out there are taking these views.
We also need to remember that board members have a fiduciary
duty to set corporate policy and make decisions based on creating
long-term value for the firm, and with the recent corporate scandals now in the spotlight, pressures are on board members more
than ever to do just that, and to do the right thing on behalf of the
companies they serve.
Giving increased powers to certain shareholders in a corporate
policymaking process on the other hand, while it may be well-intentioned, I am sure, could actually have the unintended consequences of serving interests of more short-term goals while also
introducing other agendas not directly associated with the best interest of that particular company into its corporate governance decision-making process.
When you think about it, this would really be an ironic outcome
indeed, since the focus would now be on short-term gains as often
cited as a contributing cause of the recent financial crisis.
In addition to the proposals contained in this legislation under
consideration today, there are other areas, such as the role played
by proxy advisor services, as well as proposals to increase retail
shareholder voting, and direct communication with shareholders. I
will be interested to hear from the panel before us later on.
In conclusion, at a time when the number one priority of this
Congress should be enacting policies that create jobs, I fear that
many of the proposals put forth in the legislation under consideration at todays hearing, as I said before, that I am sure are well
intended, will have the unintended consequences of hurting the
long-term ability of firms to do just that, create jobs, to thrive, either because of inappropriate one-size-fits-all policymaking or increased focus on short-term goals.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00011

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

4
Finally, yet another increase in the Federal Governments role in
our economy, especially at the SEC, which has really yet to demonstrate that it can perform its primary role of protecting investors, also does not seem to be the best prescription for fixing our
economys long-term health.
With all that being said, I look forward to hearing all the witnesses today.
Chairman KANJORSKI. Thank you, Mr. Garrett. We will now hear
from Mr. Peters from Michigan for 3 minutes.
Mr. PETERS. Thank you, Mr. Chairman. Thank you, Chairman
Kanjorski, for holding todays hearing to discuss legislation that I
believe would be not only important to improve corporate governance but also lead to a more stable economy as well.
During the 111th Congress, this committee has held numerous
hearings to investigate the causes of the collapse of the financial
sector in the fall of 2008. While there were many contributing
causes of the financial crisis, I believe that one significant cause
was the failure of corporate governance of shareholders, including
over 100 million Americans who own stock either in individual accounts or through a mutual fund, who have lost trillions of dollars
in savings as a result.
However, corporate governance is an issue that affects the entire
economy, not just the financial sector. While some of the most egregious examples of excessive risk-taking and compensation have
been found on Wall Street, there are plenty of other examples in
other companies as well.
I spent 22 years in the private sector and I believe the best and
most effective regulation is self-regulation. That is why I believe we
should empower shareholders, the companys true owners, to hold
corporate boards and management more accountable and help
them better align their priorities with long-term value.
As Members of Congress, we are held accountable to our constituents through meaningful democratic elections. However, in
many corporations, management slates run unopposed and large
long-term shareholders lack the ability to nominate their own candidates. Even worse, these nominees are elected even if a majority
of shareholders vote against them.
The current system of electing boards of directors, holding executives accountable and overseeing executive compensation is rigged
against shareholders and in favor of management. The balance of
power simply must change.
Last December, the House passed the Wall Street Reform and
Consumer Protection Act, which contained a number of provisions
that will improve corporate governance. For example, it will give
shareholders a vote on corporate compensation packages, it has improved disclosure of performance targets, and also includes language that would give the SEC authority to implement its proxy
access rules.
Soon, the Senate will be taking up comprehensive corporate governance reform legislation on its own. This legislation introduced
by Senator Dodd contains a corporate governance title which includes many of the provisions which are in H.R. 2861, the Shareholder Empowerment Act.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00012

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

5
We all agree that our corporations and boards need to focus on
building long-term value for our shareholders. I introduced H.R.
2861 because I strongly believe that it is the shareholders themselves who should have the power to oversee large complex institutions and hold corporate boards and senior management accountable for their mistakes and mismanagement.
I look forward to hearing the testimony of the witnesses, and I
would like again to thank Chairman Kanjorski for holding this
hearing today, and I look forward to working with him to enact
meaningful, comprehensive corporate governance legislation.
Thank you, Mr. Chairman.
Chairman KANJORSKI. Thank you very much, Mr. Peters. Now,
we will hear from the gentleman from Delaware, Mr. Castle.
Mr. CASTLE. Thank you, Mr. Chairman, for holding todays hearing. Corporate governance is an important issue to me and to this
committee. I appreciate the opportunity to review current proposals
and hear from experts on the impact of altering existing corporate
governance laws.
Some believe that corporate governance should be examined in
response to the financial crisis, while others have expressed their
intentions to add these sweeping changes onto a legislative response to a recent Supreme Court ruling on campaign finance.
I believe that regardless of the legislative vehicle being discussed
to push these issues forward, we must be especially careful when
considering proposals that intrude on the province of State laws
without taking into account their long-established histories and
leadership on corporate matters and their ability to quickly respond to emerging issues.
I understand that many of todays witnesses will be commenting
on Mr. Peters Shareholder Empowerment Act, which includes provisions to increase investor influence over corporate boards by allowing investors to dominate a candidate on the corporate proxy
statement.
The Peters bill also deals with the issue of requiring directors
to receive majority voting.
I am interested in learning from todays witnesses their comments on the underlying concerns here that the proposed legislation is intending to respond to, and the efforts already under way
to address some of these issues.
For example, States have already begun to respond to the proxy
access concerns by clarifying the authority of companies and their
shareholders to adopt proxy access and proxy reimbursement bylaws.
Similar changes are under consideration in the Model Business
Corporation Act. Furthermore, shareholders already have the ability to place majority voting proposals on the proxy and 75 percent
of boards now have some form of majority voting for directors.
I look forward to the testimony of todays witnesses and I yield
back the balance of my time, Mr. Chairman.
Chairman KANJORSKI. Thank you very much, Mr. Castle. We will
now hear from the gentlelady from Ohio, Ms. Kilroy.
Ms. KILROY. Thank you, Mr. Chairman, for your leadership on
this issue and for the hearing this morning.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00013

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

6
Today, we are taking a look at several proposals that will help
strengthen corporate governance rules, an important undertaking,
especially after what I learned yesterday at the hearing on Lehman
Brothers.
I look forward to hearing from the witnesses today, but I want
to touch briefly on an exchange I had yesterday with Mr. Anton
Valukas, the court-appointed examiner for the Lehman bankruptcy.
I asked Mr. Valukas whether Lehmans board of directors had a
responsibility to stop Lehmans senior managers from ignoring
their own risk management system to pursue reckless and dangerous risks. Mr. Valukas replied that the risk management process Lehman had in place was good, although it was exceeded some
30 times in a short period of time, and thus, under the business
judgment rule, Lehman could go forward with their risky bets.
Mr. Valukas went on to say that it is the regulators responsibility to step in when management is making a decision that could
have such dire consequences for the larger economy, and I agree,
but a first line of defense should come from the risk management
directors and the boards of directors of these companies, who
should have asked the right questions, who could have stopped
management from taking those excessive risks that threatened the
company and as we witnessed, the economy on the whole.
For too long, the boards of these financial firms have rubberstamped their managerial decisions and for too long, corporate governance rules have been skewed in a way to preserve the status
quo, to prevent shareholders from having a greater voice in how
companies do business.
The proposals we will discuss today could enhance transparency,
increase shareholder power, improve management accountability,
and enhance corporate governance.
Thank you, Mr. Chairman, for your leadership on this important
issue. I yield back the balance of my time.
Chairman KANJORSKI. Thank you very much, Ms. Kilroy. Now,
we will hear from the gentleman from Texas, Mr. Hensarling, for
4 minutes.
Mr. HENSARLING. Thank you, Mr. Chairman. Coming into this
hearing, as I come into many other hearings, I recall the Presidents Chief of Staff, Rahm Emanuels, infamous adage, Never let
a serious crisis go to waste; it allows you to do things that you
could not previously do before.
I see so many different ideas and pieces of legislation, some of
which may be meritorious, all trying to be shoe-horned in on the
idea that somehow this will prevent the next great economic crisis.
I have looked at the underlying causes. I respectfully disagree
with the gentleman from Michigan. I am trying to figure out where
the corporate governance issue is.
I believe there are some very legitimate corporate governance
issues that we need to discuss as a society. Having said that, I am
not exactly certain that the Federal Government is somehow
uniquely qualified to mandate best practices for corporate governance.
I think occasionally, if we look at the record in the underlying
causes of our financial debacle, frankly, it was a lot of Federal legislation and Federal regulators. Who was the one who came up

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00014

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

7
with the brainchild of having Government-Sponsored Enterprises,
be able to privatize their profits, socialize their losses, and then
give them affordable housing and tell them you have to loan money
to people to buy homes who ultimately cannot afford to stay in
those homes.
Maybe it was the bright people who came up with the idea that
we ought to create an oligopoly in rating agencies. We know where
that got us.
Maybe it was the fine regulators at OTS who could have stopped
AIG but did not. They had the regulatory authority we learned yesterday. The SEC had full regulatory authority to have Lehman account for their Repo 105 transactions, they did not. The SEC could
have stopped them. They could have had Lehman Brothers reserve
more capital, and lower their leverage, but they did not do it.
Maybe it was those Federal people who came up with those great
ideas. Maybe it was the bank regulators who said if you will concentrate your statutory capital in Fannie Mae and Freddie Mac, all
will be fine.
My point is as one who has spent a number of years in private
enterprise and a number of years in government, I have not found
that people in government are somehow uniquely smarter or more
insightful than those in private business.
Again, I believe there may be some legitimate debates over certain aspects of these proposals. To think that at this time that
number one, corporate governance issues are somehow at the heart
or even a significant contributing factor to the economic crisis, I
just have not seen the evidence. I have an open mind. I just do not
have empty mind.
Second, to somehow think that the Federal Government is best
positioned to make these decisions, particularly at a time when the
Nation still has high unemployment, still a generational high, here
is one more great uncertainty, one more great cost, one more great
mandate to be thrown on the job creating sector in America, that
perhaps maybe the Federal Government ought to let it do its business and get about creating jobs, which I think most of our constituents would agree, job number one ought to be creating jobs.
Instead, here is yet another Federal takeover. Here are more
Federal mandates that are going to harm jobs. Again, if this was
just restricted to Wall Street, I just question why is the proposal
going to impact every single publicly held company in America?
Again, it is a huge overreach that could have devastating unintended consequences yet again on an economy that is struggling to
create jobs.
I approach this particular proposal with a lot of skepticism. Mr.
Chairman, I yield back the balance of my time.
Chairman KANJORSKI. Thank you, Mr. Hensarling. Now, we will
hear from Mr. Baca for 1 minute.
Mr. BACA. Thank you very much. I want to thank Chairman
Kanjorski and Ranking Member Garrett for calling this hearing. I
also want to thank all of the witnesses for being here today and
offering your insights.
Finally, I want to commend Mr. Peters, Mr. Ellison, and Ms. Kilroy for their hard work on this issue.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00015

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

8
The events of the past years demonstrate the flaws in corporate
structure and its governance. Too often, decisions are made by a select few without paying any regard to the interests or views of the
shareholders.
While the arguments of corporate efficiency is offered as a justification for the way things are done, I would point simply to September 2008 and its aftermath to show what this narrow-minded
thinking can cause.
Corporate boards find themselves in the position and are unresponsive to shareholders demands. Even if the shareholders want
to change the structure, proxy rules and the corporate election
process are often too expensive to be able to accomplish anything.
Last year, the committee and this chamber took major steps to
enact some of these changes, and hopefully these will be able to
pass financial regulatory reform law soon.
During this hearing, I will be interested to hear the reforms we
need with regard to proxy access and corporate accountability. I
also am eager to talk about the increased diversity within the
boardrooms, allowing for more accurate representation, not only of
the shareholders, but the market in which these corporations operate.
I want them to look like what America looks like as well, and
we do not see that.
Again, I want to thank the chairman and the ranking member
for their leadership on this issue. It is about time that we had oversight and accountability, and if we did not have government intervention, then we would not be here right now if there was not too
much greed.
I respect the gentlemans comments. Yes, we do have higher unemployment, and we have had Federal mandates, but sometimes
we need these Federal mandates to make sure there is accountability and oversight, and we are doing what is right for the American people.
Thank you. I yield back the balance of my time.
Chairman KANJORSKI. Thank you very much, Mr. Baca.
Mr. Ellison has not arrived yet, so we will try to reserve some
of his time that can be expanded when he comes for questioning.
Now, we will go to the panel, and I want to thank you all for appearing before the subcommittee today. Without objection, your
written statements will be made a part of the record. You will each
be recognized for a 5-minute summary of your testimony.
First, we have the Honorable Steven D. Irwin, commissioner,
Pennsylvania Securities Commission.
Mr. Irwin?
STATEMENT OF THE HONORABLE STEVEN D. IRWIN, PENNSYLVANIA SECURITIES COMMISSIONER, AND CHAIRMAN,
FEDERAL LEGISLATION COMMITTEE, NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC. (NASAA)

Mr. IRWIN. Chairman Kanjorski, Ranking Member Garrett, and


members of the subcommittee, the single most important task
which confronts legislators and securities regulators is restoring
public faith and confidence in American financial institutions.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00016

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

9
Without a fair and honest landscape through which retail investors can work toward their financial goals, their activity will continue to suffer dramatic contractions.
The loss of public confidence can be seen from our up-close and
personal experiences with many who have withdrawn from the securities market.
The Pennsylvania Securities Commission conducted nearly 500
investor education presentations to residents in 62 counties during
the last 2 years alone. Attendees related that they are worried
about a secure retirement or paying for a childs education. Many
complain about their losses because of decreasing value of stocks,
and others indicate fear of getting involved in the stock market altogether. Those who pulled out their money in order to not subject
it to any more risk remain afraid to get back in.
Beyond anecdotal concerns, the data substantiate that investor
distrust is an ongoing phenomenon. The 200 day moving average
volume on the New York Stock Exchange now is 1.2 billion shares.
It is down nearly 25 percent from a year ago.
As stock prices have risen over the past year, the lower volume
of trading evidences that main street investors have largely stayed
out of the market.
Investors have not lost confidence because of a single event, but
because of serial market abuses, from mutual fund timing schemes
and misrepresentations concerning auction rate securities to
Madoffs and Stanfords ponzi schemes.
No one solution can restore investor faith and trust. However,
this hearing builds on several significant steps already taken by
this subcommittee and the full House in addressing the dangers to
the U.S. economy.
Businesses have evolved from a world where decision-makers as
owners of their enterprises were responsible to theirselves and felt
a sense of duty to their communities. Growth of enterprises and involvement of public investors led to a separation of ownership from
control. From that separation, emerged disagreement over what
constitutes fair compensation for management.
Traditionally, government has not involved itself in the process
whereby compensation is set. The present crisis has spotlighted a
lack of input by shareholders into executive compensation in publicly held entities. Sadly, the line between fair and negotiated compensation and corporate looting and breach of fiduciary responsibility can be difficult to define.
It has been a struggle to infuse good governance measures. Officers frequently can control board selection with compliant directors
approving compensation packages that are designed by friendly
independent consultants. Under this circumstance, conflicts of interest are ripe.
Executive compensation has long thirsted for objective scrutiny.
It is a component of corporate governance that seems understandable to the less sophisticated retail investor for whom it serves as
a barometer of internal restraints and effective stewardship.
A lead position in management does not bestow entitlement to
hoard profits from shareowners. Growth and productivity demand,
of course, an abundance of inducements for creativity and high
level of performance.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00017

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

10
At the same time, inducements must be tied to actual production
of long-term value for shareholders, rather than to manipulation of
financial results for the short-term.
In this regard, we applaud the SECs recent efforts to allow for
greater shareholder access to information, particularly amendments to proxy rules that require disclosure of risks arising from
compensation policies.
In 2007, State securities regulators adopted a resolution on disclosure concerning executive compensation and conflicts of interest
underlying the process by which it is approved.
The person in the street sees salaries of corporate decisionmakers steadily increased to a level viewed as obscene, while at the
same time, the companies paying these salaries diminish in value.
Ultimately, the funds to pay managers come from the owners of
the corporation, the shareholders. A dollar doled to the manager in
the form of augmented salary, bonus or stock options is a dollar
less in corporate assets.
The balance sheet should reflect the addition of a dollar or more
of corporate value before it is paid.
The little power shareholders have to influence executive compensation lies now in their right to sell their shares. An effective
counter weight must avail them legal strategies that will enable
them to press the issue.
In order to have any material bearing, shareholders must have
relevant and complete information. Sunlight is a renowned disinfectant, but disclosure cannot be the sole remedy.
Shareholders possessing the knowledge and skills to do so must
undertake independent analysis and aggressively articulate their
concerns. They cannot stick their heads in the sand and ignore
compensation abuses.
Even with an evolution in corporate governance, financial regulatory reform will not regain the trust of Main Street unless Congress embraces extending fiduciary duty to all professionals who
provide advice to investors.
Reform must prevent abuse of the process by which capital is
raised by those more interested in soliciting funds than promoting
legitimate enterprises.
Straightforward disqualification of repeat offenders of the rules
of the game is a logical deterrent to such abuse.
In closing, the unique experiences of my fellow State securities
regulators on the front lines of investor protection have provided
the framework for my testimony this morning. We commit to continuing to work with the subcommittee to afford the investing public the needed security to return to our capital markets.
Thank you, Mr. Chairman.
[The prepared statement of Commissioner Irwin can be found on
page 300 of the appendix.]
Chairman KANJORSKI. Thank you, Mr. Irwin.
Next, we will have Mr. Gregory W. Smith, chief operating officer
and general counsel, Colorado Public Employees Retirement Association.
Mr. Smith?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00018

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

11
STATEMENT OF GREGORY W. SMITH, CHIEF OPERATING OFFICER AND GENERAL COUNSEL, COLORADO PUBLIC EMPLOYEES RETIREMENT ASSOCIATION

Mr. GREGORY SMITH. Thank you, Chairman Kanjorski, Ranking


Member Garrett, and members of the subcommittee. Good morning.
I am Greg Smith, chief operating officer and general counsel of
the Colorado Public Employees Retirement Association. I am
pleased to appear before you today on behalf of Colorado PERA and
our membership of over 460,000 current and past public servants
of our State.
Because Colorado is one of the first States to address the sustainability of its pension plan as a result of the 2008 crisis, each
and every one of our members has sacrificed through reduced benefits, including our retirees.
We are responsible for investment over $34 billion in assets on
behalf of our members for the exclusive purpose of providing retirement benefits.
Our obligation to pay benefits extends not only to todays retirees
but ultimately to those newly hired public servants who will work
a 35-year career and then draw a monthly benefit for 20 or more
years in retirement.
As a result, our investment time horizon extends over 50 years.
We and our peers are the markets long-term investors, and the
protection of a marketplace that promotes the creation of shareholder value for the long-term is imperative to the success of our
mission.
We should not be required to simply exercise the Wall Street
walk and abandon our investment because management is undermining shareholder value or acting in their self-interest to the detriment of shareholders.
We should be entitled as the owners who have put our capital
at risk to insist that management be held accountable. This is not
an unreasonable expectation, and the mechanism to accomplish
this accountability is improved corporate governance, beginning
with the creation of alignment between shareholder interests and
the board of directors.
As an owner of the Nations largest and most prominent corporations, our fund is strongly aligned with corporate America. We have
every interest in its long-term success and profitability.
However, Colorado PERA firmly believes that the global financial
crisis represents a massive failure of board oversight as well as
regulation. Our members have paid a steep price for these failures.
Clearly, boards of directors failed to adequately understand,
monitor, and oversee enterprise risk and corporate strategy. Far
too many boards structured and approved executive compensation
programs that motivated excessive risk-taking and yielded outsized
rewards for short-term results.
These failures of board oversight are the most recent demonstration that too many boards are dominated by management and have
lost sight of the obligation to shareholders.
We respectfully suggest that at its core, this is the result of the
fact that shareholders effectively play no role in the selection of directors and have no ability to remove directors.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00019

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

12
We are denied the basic tools that shareowners around the
world, including countries with far less developed capital markets
than ours, have long been provided. Rights such as requiring directors to be elected by a majority vote, giving investors an advisory
vote on executive pay, and providing long-term owners modest vehicles to nominate directors on the company proxy card. Their absence significantly weakens the ability of shareowners to oversee
corporate directors, their elected representatives, and hold them accountable.
Turning to the content of the House bills advancing corporate
governance reforms, we strongly commend the House for affirming
the SECs authority to provide proxy access in the Wall Street Reform and Consumer Protection Act of 2009.
In addition to that affirmation, the governments improvements
that Colorado PERA believes would have the greatest impact and
therefore should be considered by the House include: requiring directors in contested elections to be elected by a majority of the
votes cast; enhancing executive compensation disclosures; providing
investors with an advisory vote on pay; ensuring compensation consultants provide independent advice; strengthening Federal
clawback provisions for unearned pay, and requiring corporate
boards to be chaired by an independent director.
As the House considers steps to enhance corporate governance
and empower shareowners, Congress must remember that boards
are the first line of defense against the risks and excesses that led
to the global financial crisis.
Vigorous financial regulation on its own cannot solve many of the
issues that contributed to the crisis. Regulators and investors must
be given stronger market based tools to guarantee robust oversight
and meaningful accountability of corporate managers and directors.
House Bill 2861 consists of all of these provisions that I have
identified, and we strongly support the principles set forth in that
bill.
Thank you for the opportunity to appear and we look forward to
answering your questions.
[The prepared statement of Mr. Gregory Smith can be found on
page 319 of the appendix.]
Chairman KANJORSKI. Thank you very much, Mr. Smith.
Next, we have Mr. Thomas F. Brier, deputy chief investment officer and director of corporate governance, Pennsylvania State Employees Retirement System.
Mr. Brier?
STATEMENT OF THOMAS F. BRIER, DEPUTY CHIEF INVESTMENT OFFICER AND DIRECTOR OF CORPORATE GOVERNANCE, PENNSYLVANIA STATE EMPLOYEES RETIREMENT
SYSTEM

Mr. BRIER. Good morning, Chairman Kanjorski, Ranking Member Garrett, and members of the subcommittee. Thank you for inviting us to appear at the committee this morning.
Established in 1923, the Pennsylvania State Employees Retirement System is one of the oldest and largest pension funds in the
United States. We have over 220,000 members, and over the past

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00020

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

13
10 years, have paid out approximately $18 billion in benefits to
workers in Pennsylvania and retirees.
Like Colorado PERA and other pension funds, we are long-term
investors with significant passive investment strategies. As a result, we have been a long time proponent of good corporate governance.
One common element in the failure of Lehman Brothers, AIG,
Fannie Mae, and many other companies implicated in the financial
meltdown was that the boards of directors did not hold management sufficiently accountable. They failed to control managements
excessive risk-taking. They did not prevent compensation plans
from encouraging a bet the ranch mentality.
As famed investor Warren Buffett observed in his most recent
letter to Berkshire Hathaway shareholders, A board of directors of
a huge financial institution is derelict if it does not insist that its
CEO bear full responsibility for risk control.
If he is incapable of handling that job, he should look for other
employment, and if he fails at it, with the government thereupon
required to step in with funds or guarantees, the financial consequences for him and his board should be severe.
After describing the half a trillion dollars that investors lost in
just these companies, Warren continued, CEOs and in many cases,
directors, have long benefitted from oversized financial carrots;
some meaningful sticks now need to be part of their employment
picture as well.
SERS, like many other long-term investors, believe that two fundamental corporate governance improvements could provide, in Mr.
Buffetts words, meaningful sticks, necessary to improve the oversight of CEOs by corporate boards, and therefore significantly reducing the likelihood of a repeat session like this.
There are two improvements that we think do the heavy lifting
going forward, and they are proxy access and majority voting.
First, proxy access. Federal proxy rules have historically prohibited
shareholders from placing names of their own director candidates
on public company proxy cards for consideration by their shareholders.
As a result, incumbent directors who fail in their oversight responsibilities have little reason to change their behavior because it
is highly unlikely they can be replaced or even challenged by an
alternate board of candidates.
Fortunately, due to the extraordinary leadership of this subcommittee and the full Committee on Financial Services, and the
SEC, proxy access will soon become a reality.
As you may recall, in June of 2009, the SEC issued a thoughtful
proposal providing for an uniform measured right for groups of significant long-term investors to place a limited number of nominees
on the company proxy card.
After very careful consideration of input received in response to
two separate comment periods, the SEC appears poised now to provide a final uniform proxy access rule that we believe responds to
the demands of long-term investors.
Importantly, this subcommittee and the full Committee on Financial Services had the foresight to include a provision in the
Wall Street Reform and Consumer Protection Act that reaffirms

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00021

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

14
that the SEC has the unambiguous authority to issue their final
proxy access rule.
We again commend the subcommittee for their leadership in pursuing this provision. We are pleased the provision is strongly supported by the Administration and is a critical element of regulatory
reform.
The second corporate governance improvement we believe is necessary is the requirement that all public companies adopt a majority standard for director elections.
Currently, most companies elect directors in uncontested elections using a plurality standard, by which shareholders may vote
for but cannot vote against a nominee. Shockingly, a derelict corporate director can still win re-election by simply receiving one vote
under a plurality standard, a single vote. They could actually vote
for themselves.
As a consequence, unseating poorly performing directors is virtually impossible. The Shareholder Empowerment Act of 2009, one
of the bills referenced in connection with this hearing, includes a
provision that requires the Commission to direct the stock exchanges to prohibit the listing of any security of any issuer if the
company does not adopt majority voting. We generally support that
provision.
The benefits of requiring all publicly listed companies to adopt a
majority vote standard are many. It would democratize the corporate electorial process and put real voting power in the hands of
long-term investors, like SERS, and make boards more accountable
to shareholders.
On behalf of SERS and the tens of thousands of employees who
depend on us for their retirement security, we respectfully request
your support for prompt adoption by all public companies of both
proxy access and majority voting.
Thank you, Mr. Chairman, for inviting me to participate in this
hearing. I look forward to answering any questions you may have.
[The prepared statement of Mr. Brier can be found on page 53
of the appendix.]
Chairman KANJORSKI. Thank you, Mr. Brier.
Now, we will have Mr. Alexander M. Cutler, chairman and chief
executive officer of Eaton Corporation.
Mr. Cutler?
STATEMENT OF ALEXANDER M. CUTLER, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, EATON CORPORATION, ON BEHALF OF BUSINESS ROUNDTABLE

Mr. CUTLER. Thank you, Mr. Chairman, and members of the


committee. Good morning. My name is Sandy Cutler, and I am
chairman and CEO of Eaton Corporation. I am also chairman of
the Business Roundtable Corporate Leadership Initiative.
I have been chairman and chief executive officer of Eaton for 10
years, and I serve on 2 other for-profit boards, as lead director on
one of those boards, and it is from this experience that I speak to
you this morning.
We at the Business Roundtable support an examination of both
corporate governance and financial regulatory reform, but believe
that each are important enough on their own merit to deserve sep-

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00022

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

15
arate consideration. Combining the two in the pending legislation
permits public anger about the financial crisis to substitute for a
fact-based examination of our corporate governance system.
Substantial changes have indeed occurred during the past decade
in corporate governance. Companies have taken a number of voluntary actions; and State legislatures, the SEC, and the New York
Stock Exchange have adopted a number of statutory and rule
changes.
We are pleased that the Business Roundtable has been at the
forefront of efforts to improve corporate governance through support of many of these initiatives.
Just this week, we are releasing our most recent list of principles
of corporate governance. These changes have resulted in more independent boards and board committees; improved board practices;
and the adoption of majority voting by a large number of companies.
As you know, the change in majority voting was facilitated by
amendments to a Delaware corporate statute and the Model Business Corporation Act, which is followed by 30 States.
Other important changes have included the New York Stock Exchange prohibition of broker voting in uncontested director elections effective at shareholder meetings after January 1st of this
year, and the SECs recent adoption of a number of disclosure enhancements that address several of the concerns in the proposed
legislation, including those related to board leadership structure,
risk management, and board oversight.
I would like to focus my comments today on proxy access, as we
view it as an ill-conceived attempt to improve corporate governance. Indeed, rather than empower shareholders, we believe it
would deprive them of important choices and have serious potential
adverse consequences.
The proxy access provision of the Shareholder Empowerment Act
would require the SEC to issue proxy access rules permitting
shareholders owning as little as 1 percent of the companys securities for at least 2 years to nominate director candidates in the companys proxy materials.
Clearly, director accountability to shareholders is extremely important, but a federally-mandated proxy access right is not the
most effective way to achieve this goal.
Moreover, a proxy access rule could exacerbate the short-term
focus that is widely considered to be a contributing factor to the financial crisis.
The process of frequent election contests could cause directors to
focus on structure and stock price rather than invest for the creation of long-term value. In addition, proxy access would permit
shareholder activists with very limited stock holdings in the company to pursue special interest agendas to the detriment of the majority of the shareholders.
Even if special interest directors do not get elected, the company
and its shareholders will have been forced to bear the costs and
suffer the distraction of a time-consuming and expensive proxy contest.
Finally, a federally-mandated proxy access right would preclude
companies and their shareholders from taking advantage of the re-

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00023

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

16
cent State proxy access enabling statutes to adopt customized
proxy access procedures that suit their needs.
Today, contemporary boards of directors use a variety of tools
and processes to see that qualified directors are presented to the
shareholders for re-election.
They strategically review skill matrices of current directors. They
carefully assess forward-looking skill requirements on the board,
such as audit committee financial experts. They see if the relevant
knowledge is present to provide guidance, counsel, and oversight.
They undertake vigorous evaluations of the board, its committees
and individual directors, and they disclose to shareholders their criterion for board membership along with the qualifications and experience of nominated directors.
It is difficult to understand how an outside process conducted
without board involvement, as proposed under a proxy access regime, will not fall short of this thoughtful and informed process.
Before closing, I want to mention three other issues related to
proxy access that the proposed legislation does not address: concerns about the current shareholder communication system; the integrity of the proxy voting system; and the influence of the proxy
advisory services. All of these have been addressed in more detail
in my written testimony.
We are pleased that the SEC is beginning a study of these
issues, but they need to be resolved before a proxy access regime
is implemented.
In closing, let me emphasize that the Business Roundtable is
committed to effective corporate governance practices. However, we
must be careful not to impose one-size-fits-all solutions that undermine the ability of shareholders and their boards of directors to
govern themselves effectively.
We stand ready to work with this committee, and I would be
happy to answer any questions. Thank you very much.
[The prepared statement of Mr. Cutler can be found on page 64
of the appendix.]
Chairman KANJORSKI. Thank you very much, Mr. Cutler.
Now, we will hear from our next presenter, Mr. Brandon J. Rees,
deputy director, AFL-CIO.
Mr. Rees?
STATEMENT OF BRANDON J. REES, DEPUTY DIRECTOR,
OFFICE OF INVESTMENT, AFL-CIO

Mr. REES. Thank you, Mr. Chairman.


Corporate governance reform is absolutely needed in response to
the financial crisis. Mandatory corporate governance rules benefit
all publicly traded companies by enhancing investor confidence in
our capital markets.
Stock market investors have just suffered the worse decade since
the Great Depression. During the past 10 years, the S&P 500 companies stock prices have declined 24 percent. Needless to say, the
retirement savings of Americas workers have been decimated.
At the beginning of this lost decade, shareholders suffered the
corporate accounting scandals at Enron, WorldCom, and hundreds
of other companies. More recently, we have been battered by the

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00024

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

17
collapse of Lehman Brothers, Bear Stearns, and the resulting financial crisis.
Corporate governance failures are the primary cause of this lost
decade for investors. We blame boards of directors for failing to
focus management on the long-term, for failing to prevent malfeasance by executives, and for failing to properly manage risk.
Nowhere is the breakdown in corporate governance accountability more apparent than on the issue of executive compensation.
CEO pay has never been higher than in the past decade. Last year,
S&P 500 CEOs received $9.25 million on average. Executive pay is
the mechanism by which CEOs have become captive to short-term
market forces.
The collapse of Bear Stearns and Lehman Brothers provides a
dramatic example of what is wrong with executive pay. Between
2000 and 2008, the top 5 executives at Bear Stearns pocketed $1.4
billion in cash, bonuses, and equity sales. Lehman Brothers executives took home $1 billion. Shareholders got nothing.
As is required in other countries, American companies should
give their shareholders a say on pay. An annual vote on executive
compensation would encourage boards to be more proactive in seeking out shareholders views.
As a result, best practices in executive compensation would disseminate more quickly. Ultimately, it is the job of the board of directors to set fair executive pay packages, to prevent malfeasance,
and to manage risk.
We believe that boards of directors have been too complaisant in
their duties. Existing corporate governance mechanisms simply fail
to adequately hold boards of directors accountable.
The election of directors is one of the fundamental rights of
stockholders, but too often, withhold votes against director nominees are ignored. Last year, over 90 directors at 50 companies
failed to receive majority support for their election. Every one of
these directors was seated despite their shareholder opposition.
Replacing plurality voting with majority vote at director elections
is valuable. However, majority voting alone cannot adequately reform the director election process.
Half of all publicly traded companies are incorporated in Delaware. Under Delawares hold over rule, incumbent directors remain
on the board even if they are not re-elected by majority vote.
To make director elections more meaningful, long-term shareholders need to have equal access to the proxy. Equal access to the
proxy will set ground rules for shareholder democracy. It will limit
the advantage of incumbents who now have unlimited access to the
corporate treasury to finance their proxy solicitation.
Equal access to the proxy will open up boards of directors to divergent viewpoints. Debate should be welcomed in corporate boardrooms, not feared.
A director whose nomination depends on a backing of a long-term
institutional investor and not his fellow directors can play that
role. That is the goal of proxy access.
Now that the SEC is preparing to issue a proxy access rule, the
opponents of reform have put forward the idea of voluntary proxy
access. According to these so-called private ordering proposals, com-

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00025

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

18
panies should be able to opt in or to opt out of equal access to the
proxy. There are two major problems with such proposals.
First of all, companies have stacked the deck to prevent shareholders from adopting proxy access. Nearly half of all companies in
the Russell 3000 Index restrict the ability of shareholders to amend
company bylaws or they have dual class stock voting.
If proxy access is made voluntary, only those companies that already have good corporate governance will adopt proxy access.
Those companies with entrenched boards will resist proxy access.
Secondly, allowing companies to opt out of proxy access sets a
dangerous precedent. Proxy access is about the Federal regulation
of proxy solicitations, not about State corporate laws, and for the
past 75 years, our Federal proxy solicitation regulations have been
mandatory.
Corporate governance reforms such as equal access to the proxy
can be a potent tool to focus companies on sustainable value creation. For these reasons, director elections must be open to longterm investors through proxy access.
Thank you, Mr. Chairman, for considering my views.
[The prepared statement of Mr. Rees can be found on page 312
of the appendix.]
Chairman KANJORSKI. Thank you very much, Mr. Rees.
Now, we will hear from Mr. Robert E. Smith, vice president, deputy general counsel, and assistant secretary, NiSource, on behalf of
the Society of Corporate Secretaries and Governance Professionals.
Mr. Smith? That is quite a title, Mr. Smith.
STATEMENT OF ROBERT E. SMITH, VICE PRESIDENT, DEPUTY
GENERAL COUNSEL, AND ASSISTANT CORPORATE SECRETARY, NISOURCE, INC., ON BEHALF OF THE SOCIETY OF
CORPORATE SECRETARIES AND GOVERNANCE PROFESSIONALS

Mr. ROBERT SMITH. Thank you, Mr. Chairman.


As stated, my name is Bob Smith, and I am vice president, deputy general counsel, and assistant corporate secretary of NiSource.
NiSource is an energy holding company whose subsidiaries engage in natural gas transmission, storage, and distribution, as well
as electric generation, transmission, and distribution.
In my position at NiSource, I am responsible for the companys
corporate group, which provides legal advice on general corporate
matters, finance matters, securities matters, governance matters,
and similar subjects.
I also serve on the board of directors of the Society of Corporate
Secretaries and Governance Professionals. The Society is a professional association founded in 1946 with over 3,100 members who
serve more than 2,000 companies.
The Societys members are responsible for supporting the work
of the companies boards of directors and their committees and the
corporate governance and disclosure activities of the companies.
I am here today in my capacity as a director of the Society and
I very much appreciate the opportunity to participate in this hearing and to provide input on behalf of our diverse membership, diverse across industry and diverse across market capitalization.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00026

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

19
The Society strongly believes in and has consistently supported
good governance practices, which include the right of shareholders
to have an effective vote in the election process and the ability to
recommend persons for nominations to the board of directors.
As potential governance legislation is contemplated, it is important that we recognize that we are currently in the midst of a corporate governance sea change.
Over the past decade, this sea change is blatantly evident
through the many leading practices that have trended toward
mainstream or widely accepted adoption by public companies.
These changes in governance practices have generally been in the
form of enhancements to shareholder involvement, shareholder
input, or shareholder information.
It is important to note that these practices are empowering
shareholders and have occurred without legislative involvement, as
individual company shareholders have determined what is best and
what is appropriate for their individual companies.
Examples of this organic shareholder empowered governance evolution includes development in such practices as majority voting,
independence of directors, policies regarding independent compensation consultants, elimination of poison pills, declassification of
board member terms, clawbacks and incentive compensation plans,
separation of chairman and CEO, and stock ownership guidelines
for directors and officers.
Adoption of governance policies addressing matters such as these
clearly show that shareholders are having a voice in the governance of companies.
Of equal importance is the observation that not all companies or
shareholders have deemed it appropriate to adopt policies addressing these matters.
This is the essence of true shareholder empowerment, the ability
for shareholders to choose whether governance issues should be addressed and if so, how they should be addressed at their individual
companies.
This is in fact the great irony behind the various pieces of legislation now being proposed as they intend to empower shareholders,
but they actually force all shareholders to adopt specific provisions
in an identical way, whether the shareholders want it or not.
This is why the Society hopes to ensure that the shareholder proposal process remains the vehicle for shareholder communication,
for shareholder change, and for the promotion of shareholder
choice, true shareholder choice, rather than forcing the hot reactionary issues of the day on all issuers and shareholders regardless
of shareholder desire or need.
It is also important to make sure that any legislative reaction
should protect shareholder value through avoiding the creation of
potential mismatches of influence by short-term investors with the
long-term growth and value creation strategies of public companies.
Looking at major provisions of the proposed legislation, I will
just touch on a couple really quickly, majority voting, for instance.
Without legislative regulatory requirements, the adoption of majority voting has been a significant trend.
In fact, according to a CalPERS release last month, as of September 2009, approximately 71 percent of S&P 500 companies and

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00027

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

20
50 percent of Russell 1000 companies had already adopted some
form of policy for director resignations or majority vote.
This is a prime example of companies hearing shareholders concerns and addressing those concerns utilizing the current proxy
proposal and communication structures.
To legislate majority voting when shareholders have in fact been
empowered to address their concerns in this area is both unnecessary and would disempower the shareholders of companies that
have determined that majority voting is not an issue they desire
to address at their companies, by in fact voting against majority
voting proposals.
I would welcome the opportunity to discuss other issues that are
in the legislation, but in conclusion, true shareholder empowerment
allows all shareholders to choose what is best for their respective
companies, not forcing shareholders to accept rigid schemes regardless of whether they want them or not.
Legislation should be thoughtfully enacted only where there is
clear consensus and empirical evidence that change is needed and
that such change would support the long-term interests of all
shareholders.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Robert Smith can be found on
page 339 of the appendix.]
Chairman KANJORSKI. Thank you very much, Mr. Smith.
Finally, we will hear from Mr. James Allen, head of capital markets policy, CFA Institute.
Mr. Allen?
STATEMENT OF JAMES ALLEN, HEAD OF CAPITAL MARKETS
POLICY, CFA INSTITUTE

Mr. ALLEN. Good morning. I want to thank Chairman Kanjorski,


Ranking Member Garrett, and all the members of the subcommittee for asking us to come speak to you today.
My name is Jim Allen, and I am head of capital markets policy
at CFA Institute. For those of you who are unfamiliar with the
CFA Institute, we are a nonprofit membership organization with
more than 100,000 investment analysts, advisors, portfolio managers and other investment professionals throughout the world.
Our members are generally involved, therefore, in investing the
savings and retirement funds from millions of Americans and others worldwide.
We are probably best known for administering the 3 year testing
program that leads to the awarding of the chartered financial analyst or CFA credential. More than 5 years ago, as part of our education program, we incorporated corporate governance factors into
those global exams, and more than 100,000 candidates throughout
the world have been tested on these issues ever since.
At the CFA Institute, we have a fundamental belief that what is
good for investors is good for financial markets in general. This
view is inherent in our code of ethics and standards of professional
conduct that applies to all of our members wherever they reside in
the world, and it has also informed the positions we have advocated to regulators and legislators globally over the years.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00028

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

21
We have long supported strong corporate governance structures
under the belief founded in research that well-governed companies
perform better over the long-term than those that are not well governed.
While we want to ensure shareowners have an effective voice, we
also do not want to interfere unreasonably into corporate boards.
This requires a finely tuned balance of interests and reasonable restraints on both investors and corporate issuers.
As noted in my written testimony, we believe that corporate governance failures on the part of financial institutions play an important but by no means exclusive role in the financial market paralysis that began in August of 2007.
Senior executives, board members, and regulators alike failed to
appreciate the potential risks coming from large concentrations of
high-risk loans funded through highly leveraged structures and unreliable wholesale funds.
I would like to note that many of the proposals made in these
three bills deal with issues which we have long supported as needed to prevent these kinds of failures.
Two such provisions are legislative efforts for majority voting and
greater proxy access for shareowners. We believe these two changes
are the most critical and most needed to ensure that shareowners
have the ability to hold their board members accountable.
Likewise, we support say on pay as a means of increasing board
accountability. Nearly 81 percent of our members responding to an
October survey said they support a non-binding vote on executive
pay. This view is due in large part to how it has worked where it
has been adopted.
Indeed, our members in the U.K. and Australia say such provisions increased board attention to investor perspectives and helped
reduce the rate of increase in executive pay by half in the first year
after adoption by U.K. companies.
We also believe that better and more relevant disclosures about
executive pay will increase board accountability and have supported regulatory efforts in this regard.
Looking ahead, we are working with the Blue Ribbon Panel to
develop a template to guide companies as they write their compensation discussions and analyses in the future.
Legislation to mandate chair independence, on the other hand, is
something we do not support, as we are concerned that it may
trade the knowledge and expertise of corporate insiders for a functional independent figure head. Rather, such matters are best left
to boards and shareowners to decide.
When a CEO is also chair, we believe that independent board
members should have the opportunity to appoint a lead director to
chair meetings of independent directors and address issues involving potential conflicts with management.
Finally, we are uncomfortable with proposals to have the SEC
certify every member of the board for each of the thousands of companies trading publicly. Such a monumental effort would divert
valuable SEC resources from the Commissions existing mandate
and could have undesirable effects on board membership.
Mr. Chairman, I ask consent that in the record, these documents
relating to items on corporate governance that we have published

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00029

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

22
over the years be allowed to be entered into the record, and we also
want to amend our written proposal to include the data from our
member survey.
Chairman KANJORSKI. Without objection, it is so ordered.
Mr. ALLEN. I thank you for your time, and I am willing to answer any questions that you may have.
[The prepared statement of Mr. Allen can be found on page 49
of the appendix.]
Chairman KANJORSKI. Thank you very much, Mr. Allen. Thanks
to the entire panel. That was a lengthy panel, but certainly insightful.
As usual, we are going to pick on the minority. Mr. Cutler, I am
looking at you.
[laughter]
Chairman KANJORSKI. No. I am impressed. First of all, let me
tell you, I have always been a proponent of the idea of self-regulation, and hopeful that any type of organization could rely on its
own internal values to guide its actions.
I have seen, however, fundamental changes in the corporate
structure and the ownership of the corporate structure, and by
analogy, I would draw to the union movement. I am sure, as a capitalist, that gets your attention.
As you recall, about 3 or 4 decades ago, there was at least across
the land a cry that unions had lost their democratic processes, and
therefore, there was a denial of the democratic process to the average union member, and this Congress, after a hesitancy, and a
rightful hesitancy, finally did enact the Landrum-Griffin Act.
The Landrum-Griffin Act could be criticized for some things, but
clearly, it imposed upon the union movement democratic processes,
that the members could be guaranteed they would have a right to
meet at conventions. They would have a right to free speech. They
would have a right to not be put upon for their actions or thoughts
in regard to their union activities.
Now, we have come to corporate activity. Up until now, we granted the presumption that corporations, shareholders, owners, directors, and management could be relied upon to act responsibly, but
I would call to your attention two things that have changed significantly.
Throughout the testimony, if you listened to the entire panel,
they all talked about the shareholders. In so many instances, there
are not any more single shareholders. These are conglomerations
of agencies that represent pension funds of individual investors
that are lumped together.
The managers of these funds really are interested in the return
on investment and are not particularly disturbed by democratic or
non-democratic activities of American corporations. They could
really care less if the return is sufficient to pay the pension or
whatever else is necessary in that fund.
There was a time in the 1929 crash that we could say look, it
is your money, you can put it anywhere you want to, and if you
want democratic processes, you can vote accordingly or take your
money and get out of the corporation.
Today, if I am part of a pension fund, as in the House of Representatives, I think it is Fund C, that has the common stock fund,

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00030

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

23
I cannot vote my common stock. I do not even know who is voting
it and I do not know what corporations they are putting it into.
The only thing I get to be told is once a year whether or not I
have made an increase in value or a loss in value. Usually, I do
not pay a lot of attention to it. Of course, I am not in that fund
because of my role here at the committee.
You do give it attention at the end of the year if you get a 30
percent loss and suddenly you are asking the pertinent question,
why did that happen? You may find out, as one witness described
the Moody operation, when they made a presentation to the board
of directors, they were inconsequential in terms of understanding
what their role was, and just absent of all the suggested thought
processes that you expect from responsible board members.
If you had listened to the testimony yesterday of some of the
chief executive officers and others and members of the board of
Lehman Brothers, it was a little bit startling.
We had a CEO who was paid a poor salary given todays monies.
I think in 2007, he only received $72 million. You could not expect
him to pay a great deal of attention to his job or attention to
whether he was working for the benefit of the shareholders or not.
He said he just did not know any of these things were happening. He was not aware they were doing repos, 105 repos. He
was not aware of the fact that so many things were being done.
Now, what I have concluded is really we are at the LandrumGriffin Act, if you will, with corporations. Are we going to impose
here through government new standards, and granted, probably
uniform standards as opposed to particularized rights of decision,
how to run one single corporation over another?
Are we going to do that or are we going to ignore the fact that
there are a large number of American people who are investors and
owners directly or indirectly in American corporations who do not
feel they are getting adequately represented, where huge bonuses
can be paid of billions of dollars, and no shareholder payments or
dividends are paid out.
We are not casting aspersions on your activities as a CEO. I am
sure you are above and beyond any of those criticisms.
Obviously, there is a percentage of corporate leadership in America that has failed. This committee, it seems to me, is called upon
to decide where are we going.
I have eaten up all 5 minutes. I am not going to get much of a
chance to get an answer from you. I will try to pick it up in my
next set of questions. I want to hear from my ranking member
from New Jersey. I am sure he has the answer to some of my questions.
[laughter]
Mr. GARRETT. Thank you. I can give you some answers. I want
to thank the panel. I do appreciate the comments and the testimony here today. I share some of the concerns.
Mr. Smith, you laid them out, and the others did, too, but I think
you laid out some of the concerns we have about some of these
things.
Let me just throw out some things. One of the takeaways I get
from this and the impression I get from a number of the panelists
was that we are in this financial crisis situation and we can look

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00031

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

24
to corporate governance as being a root cause of it. I, as you heard
in my opening testimony, have a question on that.
Let me go with this simple question. To the extent that business,
Wall Street, was a cause of the problem, and of course, there is debate as to the extent of their cause and regulators being the other
part of it, but to the extent that Wall Street was a cause of the
problem, I note that the legislation that we are looking at would
go much further than regulating with corporate governance Wall
Street.
Ninety-eight or 99 percent of public companies are non-financial
institutions. Answer this question, if we are trying to attack the
problem, which is Wall Street, why are we also addressing the
other 98 percent of the public companies with this legislation? Was
I clear on that?
Mr. CUTLER. Could I make an attempt at that, and also the previous comments, and try to combine them?
Mr. GARRETT. No, go with mine.
Mr. CUTLER. These arguments, many of these arguments on the
issues of corporate governance date back some 20 years. They have
been around for quite a long time period.
I think what is very important to keep in mind at this point is
we have come through a terrible financial crisis but there has been
no evidence in any country that you can regulate the economic
cycle.
I think we have to recognize there are cycles in economies. They
are aggravated by different crises that have occurred around the
world over time, but the heart of those is not corporate governance.
It is the economic cycle.
There are abuses that occur around the world at different times,
but I would say the solution that we are trying to solve for here
is we have two fairly distinct events: one, an enormous issue of
international financial regulatory reform and it is not just in the
United States; and two, a number of the corporate governance proposals that are being proposed did not stop, although they are in
place in other countries, they did not stop the economic cycle and
the financial regulatory reform from occurring in those countries.
Mr. GARRETT. Thank you. I only have 5 minutes.
Mr. Rees?
Mr. REES. Yes, thank you. I would point out that it is not just
Wall Street. For the past 10 years, the stock market, as measured
by the S&P 500, has performed negatively. Investors lost money
over 10 years. That is money that our pension funds depend on in
order to pay for the retirement security of Americas working families.
Corporate governance was the root cause not just of the financial
crisis, but the corporate accounting scandals, the stock option back
dating scandals, a whole bevy of scandals over the past decade.
We have to remember that corporate governance failures drove
those scandals.
Mr. GARRETT. If you are telling me that the funds you are invested with have done poorly over the last 10 years, then I would
have a question on your investment advice with regard to those
funds. Up until the crisis that we have had just now, I think the
markets have done amazingly well, if you look over time.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00032

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

25
The question that I have also is, do you find yourselves potentially in a conflicted situation here? I do agree with you on your
point where you say we need to take a long-term look at these
things.
You are in a conflicted role when you are looking for the longterm interests of the stockholders in these things versus the shortterm interests of your membership. Is that not correct?
Mr. REES. Absolutely not. Our members depend on companies to
invest for the long-term to create jobs, and I am shocked to hear
that other members of this panel think that shareholders who own
one percent of the stock of companies should not be able to nominate their own directors.
Mr. GARRETT. That was not my question, but thanks.
The question is, if you are out there trying to get jobs for your
employees today, that may at certain times, I would think, run at
cross purposes with the idea of increase in shareholder value over
the long term.
What about where those jobs are located? That thought just pops
into my head, when it comes to the issue of creating jobs, is it
maybe better for shareholder value in certain circumstances, nothing that I encourage by any means, but in certain circumstances,
maybe it would be better for those jobs not to be in the neighborhood of where your particular union is in your State, for State
funds and what have you, or out of the country.
What happens then when it is an issue of local jobs versus longterm investment? Which side do you come down on, long-term
shareholder value or the jobs for your union members?
Mr. REES. We come down on the side of long-term shareholders,
because that is in the best interest of employees of those companies.
Mr. GARRETT. Even if those employees may no longer be here in
the area of my State?
Mr. REES. We have a different view of how companies should be
managed. We believe that it should be based on the long-term interests of the company and its stakeholders, including shareholders, and we are not getting that from the current system. We
are not getting that.
We are getting short-termism , driven by excessive CEO pay
and a focus on the short-term, not the long-term. That is why
shareholders need to have a greater voice in corporate governance.
Mr. GARRETT. Do the membership of the unions have the same
ability to have that interest and governance of the unions as far
as executive pay and the other things we are looking for here in
this legislation? Do they have that say?
Mr. REES. Yes. Our officers are directly elected by the membership of the organizations, unlike corporations where the CEOs are
appointed by a board.
Mr. GARRETT. Is their compensation set by membership?
Mr. REES. It is fully disclosed.
Mr. GARRETT. I know. Does the membership get to vote on compensation? I do not know.
Mr. REES. Yes, they do.
Mr. GARRETT. In all instances, they vote on the compensation?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00033

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

26
Mr. REES. They vote on the compensation policies through the
democratic processes that the unions have established and are required to have under the Landrum-Griffin Act.
Mr. GARRETT. Thanks.
Chairman KANJORSKI. The gentleman from Colorado, Mr. Perlmutter.
Mr. PERLMUTTER. Thanks, Mr. Chairman. I appreciate my friend
from California letting me jump ahead. I have to get out of here.
Mr. Cutler, my questions are simpler. In your companyI am
not sure, what does your company do, Eaton?
Mr. CUTLER. We are a diversified manufacturer of electrical
equipment, aerospace equipment, hydraulic equipment, and automotive and truck equipment.
Mr. PERLMUTTER. How does your company go about choosing a
member of its board?
Mr. CUTLER. Our board of directors nominating committee and
governance committee does that work. As I mentioned before, they
put together skill matrices in terms of what the current skills on
the board are. They look at the strategic plan and the issues facing
the company as they see it over the next couple of years, and identify the skills that they then want to seek.
They use an outside consultant to do the initial interviewing, and
then they make the nomination and give it to the shareholders for
election.
Mr. PERLMUTTER. Do you or does your company require any kind
of knowledge on the part of your director, either before he is nominated or once he or she becomes a member on corporate governance? Is there any kind of education class?
How does your company go about making sure you have the best
directors, some of whom may have to stand up to you on a decision
or two that you want to make?
I think in my experience, sometimes boards really play a very
docile role.
Mr. CUTLER. My experience in serving on three boards currently,
and acting as the lead director on one of them, is that is a view
which is quite dated. A mass of changes have occurred in this area.
I think if you simply look at what has happened to the tenure
of CEOs, and BRT is one subset, it is about 4 years right now. This
idea of entrenched management is a backward looking issue.
If you look at board turnover, you would find last year, and I believe the number was over 60 percent, of our boards had at least
one member turnover. I think it was just over 50, I would have to
confirm that number, for two members.
You are seeing turnover occurring on the boards. I can tell you
from my own experience, my own directors at our company have
no problem in not only standing up but taking very different views
than those of management. It is a very healthy exchange.
Mr. PERLMUTTER. Is there some kind of continuing education
component that you have with your directors?
Mr. CUTLER. Yes, our policy is that our board does have a continuing education requirement through accredited education
courses outside of the company. We also twice a year conduct internal training on specific functional issues, and to come back to your
earlier question, part of the criterion that our board examines

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00034

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

27
when they look at a man or a woman as a potential candidate as
a nominee for our board is not only their breadth of business experience, but have they served on boards, do they have governance
experience, have they been around these issues?
Mr. PERLMUTTER. Thanks. I would like to ask the two Mr.
Smiths the same question: Mr. Smith of NiSource; and then my
friend, Mr. Greg Smith, from Colorado.
Mr. ROBERT SMITH. Thank you. I will speak on behalf of the Society members. The Society has noticed and we have seen as Mr.
Cutler pointed out a big sea change in the governance arena, and
the docile board connotation really does appear to be a thing of the
past for most companies.
There could be some examples of outliers in that area, but there
is a much more active board. This is seen through a move to independence, if you look at the number of independent directors on
public companies, that number has increased dramatically over the
last 10 years.
It comes as a result also even recently as a result of new disclosures that are being required. There are new disclosures that are
being required by the SEC on executive compensation analysis. Is
there excessive risk in the executive compensation plans of the
company. It comes in the disclosure on risk management.
Mr. PERLMUTTER. Let me stop you for one second. Do you have
a corporate governance kind of education policy or anything like
that at your company?
Mr. ROBERT SMITH. At our company, we do encourage the board
members to obtain outside education.
Mr. PERLMUTTER. Greg Smith, please.
Mr. GREGORY SMITH. Thank you. We are always excited to hear
when there are corporations, and we certainly acknowledge there
are many corporations in corporate America who have adopted
good policies and are taking up good practices.
Unfortunately, they are not all that way. We think what they
have demonstrated, these ones that do have good accountability,
that have good corporate governance, is that it works well, and in
fact, it does not make the sky fall. It does not make management
fail in its role. It does not tie the hands of corporate America.
In fact, it empowers both the corporations and their shareholders
to advance toward greater shareholder value.
In our organization, we certainly have education for our trustees
who are in a similar role, and in our management, we certainly are
focused on the constant education toward better corporate governance and better responsibility and accountability to our stakeholders throughout the State of Colorado.
Mr. PERLMUTTER. Thank you. Thank you, Mr. Chairman.
Chairman KANJORSKI. Thank you, Mr. Perlmutter. Now the gentleman from Delaware, Mr. Castle.
Mr. CASTLE. Thank you, Mr. Chairman. I am concerned that the
proposals that we are discussing here today and the legislation we
are discussing today may exacerbate the problem of short-termism,
and not mitigate it as all of you have indicated you would like to
see happening.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00035

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

28
Just some statistics we have picked up: annual stock trading
turnover on the New York Stock Exchange was 36 percent in 1980;
88 percent in 2000; 118 percent in 2006; and 123 percent in 2007.
This data, of course, suggests that trading speculating has replaced investing as the principal goal of stockholders or in other
words, short-termism.
Since some of your operations own so many shares, your pension
funds might be responsible at least in part for the staggering increase in turnover. For those who are involved in that, Mr. Greg
Smith, Mr. Brier, and Mr. Rees, I would assume, do you know the
average turnover of your investments? if you do not have the data
available, I do not expect you necessarily would here, but could you
supply that to us in writing after this hearing?
Do you have any comments on that, Mr. Rees?
Mr. REES. Yes. I would be happy to get you that information. I
can say that union-sponsored pension plans tend toward long-term
strategies and are passive Index investors.
We agree that there is a short-termism problem on Wall Street
and in the stock exchanges. We joined with the Business Roundtable to sign the Aspen Institute Principles for long-termism, to encourage long-term investors.
I would note that proxy access as currently contemplated by the
SEC requires that shareholders to nominate directors must have
held their shares for at least 1 year, and we have encouraged the
SEC to consider a 2 year holding requirement.
Mr. CASTLE. Let me go to the others, so I can ask some other
questions, if I may. Mr. Brier, do you have a response to that?
Mr. BRIER. We would be delighted to supply that information for
you also. We do get a large proportion of our exposure through the
Index products, so we are permanent owners. We have our active
management as well. We will be delighted to supply that.
We are also cognizant of the fact that short-term trading is a
problem. We are looking to the SEC when they address this issue,
and they had two open comment periods
Mr. CASTLE. You are saying the problem is not something you
have helped create; is that correct?
Mr. BRIER. Pardon me?
Mr. CASTLE. The problem is not something that you, your operation, has helped create?
Mr. BRIER. I would supply the information on trading, but we
have a tranche of permanent capital that we have in Index funds.
We cannot really sell those shares. We have a very active corporate
governance and proxy voting policies and we publish that on the
Web and we try to be best practices as fiduciaries. Because of that
permanent tranche, we are long-term holders.
Mr. CASTLE. Okay. Mr. Greg Smith?
Mr. GREGORY SMITH. I will be happy to provide that information.
I also am a co-chair on the Council of Institutional Investors, one
of the largest accumulations of public pension plans, corporate pension plans, Taft-Hartleys in the world.
Based on our examination of our membership, I would be extremely surprised if you found that pension plans are the source
of short-termism.
Mr. CASTLE. You will try to get me the information?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00036

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

29
Mr. GREGORY SMITH. Absolutely.
Mr. CASTLE. That would be great, if you could.
Let me ask Commissioner Irwin a question. For 150 years, we
have had a State corporate law system that has allowed directors
and shareholders to continually change the organic governance system for corporations.
Over the past several years, we have seen three-quarters of the
S&P 500 companies adopt majority voting, ending staggered boards
in a large number, separating CEO and chairman roles, all without
government mandates.
If reforms are already happening at the organic level, why should
we want to marginalize directors and shareholders and empower
Washington bureaucrats?
The decade has seen the entrance of government into corporate
governance and the corresponding fall of public companies in the
United States and a rise in public companies around the rest of the
world.
Are we legislating away our economic advantages to score shortterm political gains? You are, of course, involved at the State level.
I would be interested in your comments on that.
Mr. IRWIN. Certainly, Congressman Castle, it is a difficult question. I am not saying thatI believe that corporate governance
issues were the cause of the crash and the melt down.
Clearly, some of the things that we are talking about will instill
a much greater sense of security and trust that will bring people
back, the retail investor on Main Street back, to the capital markets.
Mr. CASTLE. My question is, is this not happening anyway, so
why do we need to do this as a Federal legislative mandate?
Mr. IRWIN. One reason, we have national exchanges, and you
have heard from some members of the panel that they invest
across an Index, so everybody who is listed on an exchange is going
to have investment of substantial assets from people investing
without any control by them individually, but by their pension
funds.
We ought to have a minimum level of expectations as to disclosure, as to such things as executive pay and other things, so that
there is that kind of integrity and trust that will cause those investors to return.
Mr. CASTLE. Unfortunately, my time is up. I yield back.
Mr. IRWIN. Obviously, we are the States. We do not really advocate preemption. We believe that whatever the rule is, we have to
ensure that the States have the right to enforce the rule, even if
it is a Federal rule.
Mr. CASTLE. Thank you.
Chairman KANJORSKI. Thank you very much, Mr. Castle. Now,
we will hear from the gentleman from California, Mr. Sherman.
Mr. SHERMAN. I would also like to respond to the gentleman from
Delaware. We have just had this great catastrophe, and in the
wake of that, everybody has gotten religion. Everybody has reform
and board members are going to classes.
If we are lucky enough to go 10 years without a catastrophic crisis and scandal, all this will end. People will return to their old
ways. That is why I think we have to institutionalize the lessons

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00037

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

30
of the last 2 years, rather than expect that this wave of caution is
going to persist.
We have seen this after every bubble, everybody is really cautious a year or two after the bubble explodes.
State law has traditionally governed such issues as how long a
term can a director have, do you have staggered terms, do you have
cumulative voting, do you mandate cumulative voting?
What we have seen for the most part, and there are some exceptions to this, is a race to the bottom. Every State says ah, there
may be franchise fees for us if we could just get those corporations
to incorporate here, and then when they go bankrupt, we get to do
the bankruptcy work, too.
The question is, should we at the Federal level establish a floor
of minimum rights for minority shareholders that have to apply to
all publicly held companies.
One of these issues is cumulative voting, a system where even
if there is a group of shareholders that has 51 percent of the
shares, they do not necessarily get 100 percent of the board seats.
If there is a group that has 10 or 20 percent of the shares, they
get a board seat.
Mr. Rees, should we as a matter of Federal law compel cumulative voting so that a minority of shareholders, not a tiny minority
but a 10 or 20 percent minority, can get themselves at least one
seat on the board?
Mr. REES. The Federal Government, since the passage of the
1934 Securities and Exchange Act, has set and regulated the proxy
solicitation rules, and has clear authority to do that, and I believe
can do things like proxy access through that authority.
Your question regarding cumulative voting, cumulative voting is
another means to empower shareholders to have board representation. I think it is something that is worthy of consideration. I would
think it would need to be done through stock exchange listing
standards because these are national exchanges.
At this point, I think proxy access is the way that the Federal
Government should set the ground rules for proxy solicitations.
Mr. SHERMAN. I think there is a tendency for all of us to just buy
into the traditional division between State and Federal and that is
the Federal Government controls the proxy statement, the States
control the corporations code.
I am not sure that has worked all that well, certainly not over
the last 2 years. It is the long-established tradition.
Mr. Rees, how would we see corporation behavior change if we
did have the kinds of proxy access rules that you are advocating?
Mr. REES. I strongly believe that just one independent thinker on
a board of directors can have a profound effect on how well that
board governs the corporation. I believe what is important is not
the nominal independence of directors or the nominating committees that select those directors, but it is the independence and spirit and the process.
The process that proxy access would provide is for a director to
be nominated, not dependent on the goodwill of his fellow directors,
but by the backing of a large institutional investor. I believe that
is a very healthy process that needs to be implemented.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00038

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

31
Mr. SHERMAN. I think you just made the case for cumulative voting since you set forth the advantage of having a 10 or 20 percent
group of shareholders able to elect that one independent director.
Mr. Irwin, I see you are the securities commissioner. I do not
know if you are the corporations commissioner. How long a term
of office can a director have if his corporation is clever enough to
incorporate in the most lenient State? Any idea?
Mr. IRWIN. I am not the corporations director. I apologize. I cannot answer that question.
Mr. SHERMAN. I have seen 3 years, I have not seen longer. I have
seen 3 years with staggered terms. That is usually thought to be
a defense against minority shareholders, that and the absence of
cumulative voting.
Mr. Chairman, I see my time has expired. I hope we set minimum national standards for empowering minority shareholders. I
yield back.
Chairman KANJORSKI. Thank you very much, Mr. Sherman. We
will now hear from the gentleman from Texas, Mr. Hensarling.
Mr. HENSARLING. Thank you, Mr. Chairman. Before I begin my
questions, I would ask unanimous consent that testimony from the
Center On Executive Compensation prepared for this hearing be
entered into the record.
Chairman KANJORSKI. Without objection, it is so ordered.
Mr. HENSARLING. Thank you, Mr. Chairman.
I think it was you, Mr. Brier, or several of you who used the
phrase excessive risk-taking in describing investment strategies
or business strategies of certain failed firms. That was you? Can
you define excessive risk-taking versus risk-taking?
Mr. BRIER. I think American capitalism as a brand took a massive hit when the global financial system melted down and Lehmans demise. I think that is a case study of the entire investment
banking industry failing to recognize the counterparty risk that
was within the system.
I think it is endemic to the entire financial services industry.
Mr. HENSARLING. What is the difference between risk-taking and
excessive risk-taking?
Mr. BRIER. I would say an excessive risk is one that brings it to
bankruptcy. I think it is clear that an excessive risk brought several
Mr. HENSARLING. Is there a company that enters into Chapter 11
today that engaged in excessive risk-taking?
Mr. BRIER. I would say if they technically defaulted on their obligations, they failed to manage risk properly. There are market
forces as well.
Mr. HENSARLING. I have seen statistics from either SBA or NFIB
that approximately 80 percent of all small businesses fail within 3
years. Does that mean they engaged in excessive risk-taking because they failed?
Mr. BRIER. I think there are market forces in place. I think the
concern here is the misalignment of executive compensation and
risk-taking within the financial industry and other parts of the insurance industry.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00039

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

32
I think there is a failure to recognize. AIG is a case study on
this. They had an unit based in London because there was no oversight that was literally
Mr. HENSARLING. Lets talk about AIG for a moment here and
some of these other firms. Again, the problem I am having here is
trying to figure outI am unacquainted with having a rate of return without having some risk attendant to it. It is when do we
cross into that red area that says excessive risk-taking.
To some extent, I am concerned are we as policymakers on the
road turning over this definition of excessive risk-taking ultimately to the Federal Government. Is that the road we are on?
If so, was it excessive risk-taking by Members of Congress and
Federal regulators, again, to set up Government-Sponsored Enterprises to essentially create a monopoly in the secondary housing
market, and then give them ever increasing affordable housing initiatives that have now cost taxpayers $130 billion, and it continues
to rise.
Was it excessive risk-taking to have Federal bank regulators tell
banks that they could concentrate their statutory capital in Fannie
Mae and Freddie Mac paper, that they thought it was riskless and
it turned out to be the most risky asset they had.
The point I am making is I am not really sure there is a monopoly of wisdom here on exactly what is excessive risk-taking.
Lets talk about executive compensation. It seems to be Wall
Street firms failed. Executives made obscene compensation packages, therefore, we must regulate compensation packages.
There are a lot of obscene compensation packages out there.
Again, I have an open mind, but I am looking for the evidence that
of the Wall Street firms that did not fail, where is the distinction
in the compensation packages?
I have seen a study submitted that came out of Ohio State University that says, When we look at the subset of the 54 banks that
received TARP funding in our dataset, we find there is no statistically significant difference in the relation between dollar equity
incentives and returns in the sub-samples of TARP and non-TARP
recipients.
I have seen a paper from the American Enterprise Institute: If
bankers were being lured by their banks compensation systems
and acquiring risky but lucrative assets, they should never have
bought AAA bonds, which they did.
I have a study coming out of George Mason University comparing
the compensation of banks determined healthy enough to repay
their TARP funds to compensation of banks likely to need additional injections of capital that reveals little difference in their executive compensation approaches.
At least the academic studies I have seen do not make the case
for the nexus, and even if it did, we have again legislation before
us to impact every single public company in America, for which I
do not quite understand the rationale.
One quick last question for you, Mr. Rees, and your exchange
with Mr. Garrett. Is there a Federal mandate that forces rank-andfile members to vote on the compensation of your union executives?
Mr. REES. There is not a say on pay mandate for union members
to vote on executive compensation.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00040

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

33
Mr. HENSARLING. Thank you.
Mr. REES. That being said, union executive compensation is not
what helped cause the financial crisis and it is not what has caused
10 years of stock market underperformance that has damaged
workers retirement savings.
Mr. HENSARLING. The executive compensation at American Airlines, Dean Foods, and other large employers in Dallas, Texas did.
Thank you.
Chairman KANJORSKI. The gentlemans time has expired. Mr.
Ellison, since you were unable to make your opening remarks, we
will attach an additional 3 minutes to your 5 minutes. Go ahead,
sir.
Mr. ELLISON. Thank you, Mr. Chairman, for holding this very
important hearing. I really appreciate it.
Here is my statement which I will also submit. Chairman Kanjorski, Ranking Member Garrett, and members of the Financial
Services Committee, thank you for holding this important hearing
on corporate governance.
Clearly, new financial regulations should focus on enhanced consumer protection, identification of systemic risks, and enforcement
of rules by aggressive regulators, but we are here today to discuss
another crucial element to our approach, corporate structural relationships among shareholders, officers, and directors that generate
outcomes in areas such as profitability, risk creation, and compensation.
Corporate governance changes seek to beneficially alter the nature of the corporate behavior and therefore address potential
causes of economic injustice at a root level.
The bill I introduced, H.R. 3272, makes several proposals designed to strengthen the rights of shareholders and mitigate corporate risks.
As a preliminary matter, I would also like to emphasize that jurisdictionally, the bill also affects companies that issue securities
subject to Federal regulation of the Securities and Exchange Act of
1934.
The first element of the bill is the requirement that the chairman
of the board be independent and not serve as an executive officer.
The goal with this provision is to reinstate the traditional divide
between directors and officers, with the hope that the divide will
promote increased board oversight and scrutiny of decisions of officers.
As we are all aware, many companies in recent years have fused
the director and officer relationship, especially through the combined title of chairman of the board and chief executive officer. Separation of the chairman of the board from officers should promote
independence.
Later on, I will ask members of the panel to offer their views on
this topic.
The bill provides for the establishment of an independent risk
management committee to oversee risk management policies and
an independent compensation committee to oversee and review
compensation practices.
Related to risk management, the bill also creates a position of
risk officer to establish, evaluate, and enforce risk management

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00041

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

34
policies. I believe that a risk management committee and a compensation committee are crucial first steps that will force a company to approach these matters with the care, diligence, and scrutiny that they deserve.
The hope is that companies will realize that risks within the
company have the potential when aggregated with other risks from
other companies to create broad-based risks that can further impact the company itself.
Companies at the front line of business activities must be more
vigilant about risks.
With regard to compensation, my hope is that compensation committees will think about compensation practices throughout an entire firm and not just for upper level executives. The simple fact
that we speak about compensation in terms of executive compensation and not compensation for everyone else probably suggests that
we have a serious problem.
As we are all acutely aware, upper level executives are paid at
levels or orders of magnitude higher than average employees and
the trend has become more asymmetrical over time.
While the government is not in the business of setting wages, a
legal requirement such as a compensation committee should inject
additional scrutiny into a review of compensation.
Additionally, in terms of compensation, the bill requires a nonbinding shareholder vote to approve executive compensation when
proxy solicitation rules require compensation disclosure.
This is simply one of the many proposals currently on the table
related to shareholder review of compensation.
Shareholders, as the owners of companies, should have the right
to ensure that their ownership stake is used to pay wages that promote the profitability of the company.
Executives should not be able to drive companies into the ground
and walk away with millions. The shareholders, if given the opportunity to review compensation, would not allow this practice to continue.
Finally, H.R. 3272 provides that the SEC will study whether it
should certify members of the board before they are able to join.
Because some may view this as a drastic step, I would emphasize
that this bill simply asks the SEC to conduct a study to determine
the feasibility of such an approach.
Thank you again, Mr. Chairman. Mr. Chairman, if I have any
time left for a few questions, my first question is, I think certain
members of our panel, I am not sure which ones, have recognized
that there is a trend of separating the CEO from the chairperson
of the board.
If you regard this trend as actually happening, why do you account for it and do you think it simply should be the policy for publicly traded companies?
Mr. ROBERT SMITH. Thank you. I believe in my opening remarks
I did mention there is an observable trend currently in our membership towards the separation of CEO and chairman.
Having said that, and why that is occurring, I think it is occurring for the appropriate reasons, because as shareholders look at
the individual policies and individual practices of their companies,

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00042

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

35
they are determining a need at that company for a separation of
the chairman and CEO.
It comes through the proposal process. There is a dialogue that
happens with the company. Then in the cases where a majority of
the shareholders would then desire that, it is passed and implemented.
Having said that, we feel strongly that it should not be legislated
because that disempowers the shareholders to have that dialogue
and it disempowers the shareholders to have the choice as to
whether or not that is the appropriate thing.
As for the example in Mr. Garretts opening remarks regarding
Bill Gates, under the current Peters bill legislation, he would not
be able to serve as the chairman of Microsoft, and it is incomprehensible how that would be in the shareholders best interest.
There are examples like that, new companies who are IPOing
and coming out, and they have a CEO with a rich history of knowledge of the company and the industry, and to bring in someone
with zero tenure and to have them then be the figurehead and the
chairman of the company, it does not always make sense. Sometimes, it does. Sometimes, it does not. That is why we would recommend it not being legislated, but being a viable option.
Mr. ELLISON. Any other views on this topic?
Mr. CUTLER. Yes, I would just add that we agree with that position and really feel the SEC required disclosure on leadership
structure last year is very appropriate and I think as you look at
the proxies coming out in the 2010 season, you are seeing companiesthe boardspecifying what their leadership structure is and
why they chose that structure. We think that is the appropriate
level of disclosure on an annual basis.
Mr. GREGORY SMITH. It is disturbing to us in Colorado in our
pension fund that for some reason, the successes that have occurred across the country in reforming corporate America to adopt
appropriate governance standards has now become the shield for
corporations who have not adopted these standards and have not
taken these progressive steps to say, oh, look, it is happening already without us being told and forced to do it, and they are being
allowed to hide behind the good members of our corporate community.
We would suggest that in fact what has happened is the corporations who recognize and acknowledge their obligations to shareholders have taken the appropriate steps and for that, we are
thankful, but to suggest that therefore shields those who have not
taken those actions from needing to or relieves the need for Federal
legislation to impose appropriate tools for shareholders to enforce
these principles, these core principles, it is just a travesty, and it
needs to be looked through and not allowed to be successful in hiding these bad actors or these failures by other corporations.
Mr. ELLISON. That point is well taken. Going back to Mr. Cutlers
point, the fact that some companies have taken the step, are you
submitting to us that should somehow be evidence that the ones
who have not taken it, that means they do not want it, there are
not shareholders who would like to see that kind of action, but for
some reason, are curtailed in some way?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00043

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

36
Mr. CUTLER. I would just say very briefly that I think it is a little disingenuous, with due respect to my fellow panelists, to say
people are hiding behind this. Many corporations have participated
in advancing the feeling that there should be a leadership structure
disclosure and the board should make that appropriate decision for
what is right for that individual corporation in light of some of the
factors that my fellow panelist, Mr. Smith, mentioned.
It may also be an issue in terms of evolution, in terms of either
a new executive or an executive who has is to provide tutorage for
one year.
Chairman KANJORSKI. The gentlemans time has expired.
Mr. ELLISON. Thank you. I yield back the time I do not have.
[laughter]
Chairman KANJORSKI. The gentleman from California, Mr.
Campbell.
Mr. CAMPBELL. Thank you, Mr. Chairman. I may be unique on
this committee in that I strongly support proxy access. However, I
strongly oppose this particular bill.
I would like to explore with the panel my concerns and see where
you all fall. First of all, let me say that on the majority voting, I
obviously support that. I think there is not a lot of controversy on
that since about 50 percent of public companies have that now, and
I think that is an important part, proxy access, for it to work.
I also think that if you have these things, proxy access and majority voting, then shareholders have mechanisms through which
they can express their displeasure with a company short of selling
the stock, and therefore, I believe you do not need all these other
things like executive comp and the chief risk officer and the board
certification, all that kind of stuff.
What I would like to focus on is the proxy access part. My first
question is to those of you on the panel who support proxy access,
my concern with this bill is that it allows the SEC to set the
thresholds of proxy access, and they have indicated that 1 percent,
3 percent, and 5 percent roughly for large cap, mid-cap, and small
cap companies, are the proper thresholds.
I believe those thresholds are too low and could result in a greater problem than not having proxy access for this reason: if a single
shareholder or a group of shareholders who have a very narrow interest have access to the proxy to express that narrow interest,
then that is not in the best interest of the shareholders generally.
I understand all the shareholders have to vote the director in.
You could have shareholders that are a union, a supplier, a customer, or perhaps have an event coming up where although they
are a long-term shareholder, they have a very short-term focus because they have a sale event that is imminent for some reason.
Any of those things, particularly in a small cap company, 5 percent share holding is not necessarily a big shareholder and is not
necessarily a huge investment for a lot of particular institutional
players.
For those of you who support proxy access, do you share my concern, do you believe that larger thresholds, 5, 10, and 20, something like that, so you have to have an amalgamation of shareholders that would have to not represent a narrow interest but

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00044

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

37
would still be not a huge percentage but something like 5, 10, and
20, which is what I support.
Whomever wishes to answer. Mr. Smith?
Mr. GREGORY SMITH. We have done significant work on that very
issue because we are concerned about exactly what you raised. As
a public pension fund, we certainly see the risks associated with
giving people access to a proxy and the need to then be informed
about who we are voting for on those director votes.
The realities of who owns shares and how many they own and
how you get to these percentages is very important to understand.
What we did was do an examination of the top 10 public pension
plans in the country and their holdings in a range of 10 different
companies covering a spectrum of cap size.
In that study, what we determined was that there were on average .86 percent of the shares were held by the top 10 pension
funds.
Mr. CAMPBELL. Combined?
Mr. GREGORY SMITH. Less than 1 percent combining all 10 of
them, the 10 largest had less than 1 percent of the shares. The
highest they had in any of the companies that we examined was
2.86 percent. That is all 10 of them combined. That is the biggest
in the country, biggest in the world.
Mr. CAMPBELL. My time is wrapping up. I know Mr. Rees wants
to say something. I will just ask my second question, which is for
the opponents of proxy access. If thresholds are larger, does this
soften your opposition or change your opposition to proxy access if
there are larger thresholds?
Mr. Cutler?
Mr. CUTLER. If I could, unmentioned so far is the position of
hedge funds in corporations, and they are a considerable multiple
of that figure. Obviously, the pressure from hedge funds for shortterm actions to lever up a company to take actions that are not in
the long-term interest of the shareholders, we believe, or the employees or the customers, is considerable.
Higher thresholds would help, but our fundamental issue is that
we believe it is an issue of State law, not Federal law.
Mr. CAMPBELL. Mr. Rees?
Mr. REES. I would make two points. One, that under the current
proxy access rules, many boards of directors would not qualify because the directors themselves do not hold 1 percent of the shares
outstanding to nominate directors.
My other point would be that under the current proxy solicitation
rules, it is only hedge funds and takeover funds that are doing
proxy fights today. There were 40 proxy fights last year which were
dominated by short-term forces.
Mr. CAMPBELL. I agree with your 2 year threshold, absolutely,
but still, you can have a long-term shareholder with a narrow or
even short-term perspective if the threshold is too small.
I yield back. Thank you.
Chairman KANJORSKI. Thank you, Mr. Campbell. Now, we will
hear from the gentlelady from Illinois, Ms. Bean.
Ms. BEAN. Thank you, Mr. Chairman. I have a question for Mr.
Cutler. First, about majority rule. It is my understanding that in
the last couple of years, 63 companies held shareholder votes on

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00045

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

38
whether to institute a majority vote rule, which resulted in shareholders of 27 of those 63 companies voting against it. Other companies did choose to adopt it.
If the purpose of majority voting is to empower shareholders,
what would be some of the reasons that nearly half of shareholders
would vote against requiring it?
Mr. CUTLER. I personally cannot speak for what their specific
reasons were. I think the trend is the important one here. We are
seeing a very high number of companies adopting majority voting,
and while we think that is a decision that shareholders should be
making for their individual corporations, there are situations
where the preponderance of shares may be held by very few shareholders in some firms, often because they are smaller, and that is
why we do not think there should be a Federal rule requiring it
across the spectrum of all companies.
Ms. BEAN. My second question for you is some have suggested
that the risk of proxy access is that it would empower short-term
holders, hedge funds, raiders, for example, to influence company
decisions. Do you believe that could lead to more emphasis on
short-term results as opposed to the creation of long-term shareholder value?
Mr. CUTLER. We do believe that proxy access with those pressures can exacerbate the pressures that are already out there, the
short-termism, and do not come simply from this issue of corporate
governance, but from the focus on short-term profits and shortterm payouts of cash dividends, etc.
Ms. BEAN. Thank you. My next question is for Mr. Smith or Mr.
Rees. If the majority of shareholders at a company did not want
majority voting, is it your understanding the current proposal
would reject that option for them?
Mr. REES. If I may, I believe that the proxy rules need to provide
minimum standards for the election of directors. I believe that majority voting is one way to make director elections real accountability mechanisms.
To the extent that shareholders have not voted in favor of those
proposals this year, I expect that in future years, we are going to
increase demand, but more importantly, you have to remember
that many companies due to dual class voting arrangements, due
to the bylaw restrictions that prohibit shareholders or require
super majority votes to change the bylaws, shareholders do not currently have the mechanisms to implement reforms like equal access
to the proxy or majority vote director elections.
Ms. BEAN. Would the short answer be yes, their views should be
rejected even if they vote against it?
Mr. REES. The short view is that shareholders need to have their
votes on director elections respected and that is why we need majority voting.
Ms. BEAN. My next question is, there was an example that came
up, and I forget who mentioned it, that Bill Gates obviously had
been CEO and later chairman of the board, and you did not hear
a lot of folks at Microsoft uncomfortable with that.
For those who think that this legislation, which would disallow
that, is a good idea, can you explain why?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00046

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

39
Mr. REES. With all due respect, most publicly traded company
CEOs are no Bill Gates, and if they were Bill Gates, then I think
there would be less of a concern about the fact that most companies
in the United States have combined positions of chairman and
CEO.
Mr. GREGORY SMITH. I would also suggest that had Mr. Gates
had a separate chairman as opposed to his CEO role, he would
have probably functioned quite well within that arrangement, and
he would have communicated well with his board. He would have
disclosed his management objectives and strategy, and he would
have worked with the board chair, an independent chair, to come
up with an agenda that gave the directors the opportunity to address that strategy.
Nothing would have tied Mr. Gates hands by having a separate
chair of the board.
Mr. CUTLER. What you do run the risk of is legislating out talent,
and that is a danger.
Ms. BEAN. I would agree with you. Thank you. I yield back.
Chairman KANJORSKI. Thank you very much, Ms. Bean. Now, we
will hear from the gentleman from Illinois, Mr. Manzullo.
Mr. MANZULLO. Thank you, Mr. Chairman.
Mr. Cutler, my father-in-law worked for Cutler Hammer for
years, and last year he sent you the 50th anniversary brochure. It
occurred several years ago. You kindly gave him a call and talked
for quite a bit of time with him, and I want to thank you for taking
that time just to spend on one of your former employees. That is
very commendable.
I have a big problem here. Is anybody proposing any legislation
to determine when a corporation should incur a dividend or take
that money and reinvest it into new structures or companies?
Does anybody see a problem with the Federal Government making that determination? Or should the Federal Government simply
determine the salaries of everybody at every level of the corporation, does anybody have a problem with that?
I have a problem to the extent that the Federal Government that
passes a health care bill that does not even know if its own Members of Congress are covered and has the chief spokesman going
around the country saying nobody will lose their health insurance,
that this august body is telling corporate America what is the best
way to run your board of directors.
Somebody has to come in here and say, if we had passed the
Proxy Voting Transparency Act, the Corporate Governance Reform
Act, and the Shareholder Empowerment Act, that this sage, this
independent director would sit on the board of every major corporation and be there to stop any type of default on the part of a corporation.
Can somebody answer that question?
Chairman KANJORSKI. Will the gentleman yield?
Mr. MANZULLO. Sure.
Chairman KANJORSKI. You are asking some interesting questions. We are trying to establish policies here that could protect the
American people, and since your side of the aisle just a short number of years ago suggested that all the Social Security funds of the

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00047

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

40
United States be invested in American corporations, then all the
Social Security
Mr. MANZULLO. Reclaiming my time, I am just making the statement that just because something goes wrong in the financial markets, or something goes wrong with the corporations, that Congress
sitting here taking the position that putting someone independenthow do you determine who is independent?
What if a creditor gets on the board and he is independent or he
is on the board of another company to which the corporation owes
money and says well, you should do things in order to prefer creditors first?
I do not think you can get anybody who is truly independent.
Several CEOs sit on other boards themselves. That is okay because
you have collective wisdom. You have lots of years of people who
have seen mistakes, made mistakes themselves, and wanted to
make sure those do not occur again.
I just have a problem with every time something goes wrong,
Congress sitting here trying to make these micro decisions. Does
anyone want to comment on this?
Mr. Cutler?
Mr. CUTLER. I think as I mentioned before, the temptation coming out of any severe financial crisis like we just came through is
the feeling that somehow it could have been prevented through different forms of corporate governance.
I, myself, feel that we came through obviously a very damaging
recession. We go through cycles, and we have been through them
before, and the focus of financial regulator reform is that which
gets at the core of the issue which caused the liquidity crisis.
I personally have not seen evidence that the rest of the damage
in the economy that came from that credit crunch came from poor
corporate governance practices.
I think the enormous revolution that has been occurring since
2000 in corporate governance is a trend that we should continue
to see play out, the independent committees, the improved boards,
the independent selection of board members, the vigorous evaluation on an annual basis of board member performance. These are
all very positive issues, coupled with the SECs new disclosures
around leadership, around risk. These are important disclosures
that are important for shareholders to have access to.
Mr. MANZULLO. When you look at what happenedyou see in
Mr. Paulsons book where he encouraged $20 billion worth of sales
of stock of Fannie Mae and Freddie Mac, knowing full well that
there would be a default on it, and a lot of community banks got
stuck with it.
The Federal Governments role in trying to be independent and
protect the shareholder is not exactly exemplary. Thank you.
Chairman KANJORSKI. The gentleman from Indiana, Mr. Carson.
Mr. CARSON. Thank you, Mr. Chairman. This question is for Mr.
Gregory Smith. Among your proposed executive compensation reforms, you recommend stronger clawback provisions in legislation.
There is currently language in Sarbanes-Oxley that allows for
clawbacks due to executive misconduct. The definition of misconduct is really open to interpretation.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00048

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

41
Please talk about specific improvements to the language that
could be included in legislation.
Mr. GREGORY SMITH. The language that is contained in some of
our policies related to clawbacks focus on whether those clawbacks
would be related to misstatements of performance, misstatements
of financials, the ability to claw back because in fact their performance had been misrepresented. I think that is really the core of our
objectives from a legislative perspective.
We do not claim to be able to identify exactly what compensation
should be able to be clawed back in every case. That is going to
be a company by company determination, and I think it is important to recognize that in none of our reforms have we asked for legislation to set what compensation is going to be, set a formula for
what compensation is going to be, or set a formula for what compensation can be clawed back.
What is really important is that we have the ability to do those
clawbacks but even more importantly that the shareholders have
a voice in the boardroom to make sure that happens, and frankly,
that it be put in the contract at the outset with that CEO so that
he knows it is going to be clawed back if is misperforms, he knows
they are going to pull those dollars back if he does not accurately
represent what the corporation has been doing and what the financial condition of the company is.
Mr. CARSON. Thank you. I yield back, Mr. Chairman.
Chairman KANJORSKI. Thank you very much, Mr. Carson. The
gentlelady from Ohio, Ms. Kilroy.
Ms. KILROY. Thank you, Mr. Chairman. Mr. Irwin, in your testimony you indicated that sunlight is the best disinfectant. Do you
think then it would be a good thing to require all 13-S institutional
investors to disclose how they vote their proxy, knowing how pension funds, unions, hedge funds vote, to add some transparency to
the corporate election process?
Mr. IRWIN. My comments today have been as the Federal legislation chair for NASAA, the North American Securities Administrators, and our focus has been on executive compensation.
No one is asking today or NASAA is not, and the States are not,
asking that there be a Federal determination by the SEC or anyone
else or a review of wages or compensation in corporate governance.
Rather, we suggest that there be review and disclosure so that
shareholdersthey are the best regulator of public companies
have access to the complete information.
Ms. KILROY. I was simply asking whether institutional investors
should be required to show how they voted their proxies when
there was a proxy vote.
Mr. IRWIN. I do not have a position on that, Congresswoman.
Ms. KILROY. Thank you. Mr. Smith, your group, the Colorado
Public Employees Retirement Association, I understand you have
adopted a policy for your domestic proxy votes; is that correct?
Mr. GREGORY SMITH. Yes, we disclose our proxy votes on a
monthly basis on our Web site.
Ms. KILROY. Do you think it would make sense to require this
of all institutional investors over a certain size, say over $100 million?

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00049

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

42
Mr. IRWIN. Obviously, my board of trustees believes that is an
appropriate practice for public pension plans and it is one that we
are proud to be a leader of.
Ms. KILROY. Mr. Rees, does the AFL-CIO support increased
transparency by disclosure of proxy voting?
Mr. REES. Yes, we do. We disclose both our guidelines and our
proxy votes, and we believe that all market participants, all institutional market participants, including hedge funds, investment
managers, and mutual fundsmutual funds are currently required
to disclose their votesshould be.
More importantly, we believe that companies need to implement
those votes when adopted by shareholders, and that is why we believe governance reforms like majority vote in director elections are
so important.
Ms. KILROY. Thank you. Mr. Allen, CFA is the sponsor of an investor working group?
Mr. ALLEN. Yes.
Ms. KILROY. Am I correct that the investor working group supports the central recommendation of the disclosure of proxy votes?
Mr. ALLEN. I believe that is correct. I cannot recall whether that
was one of the provisions of the IWG report, but I do know that
is something that the CFA Institute does support; yes. You are
talking about the investment firms disclosing?
Ms. KILROY. Disclosing how they vote; correct. Or unions or retirement funds.
Mr. ALLEN. The idea is the investors in those funds need to understand how their managers are voting those shares so they can
determine whether or not they want to invest in it.
Ms. KILROY. Thank you very much. Mr. Smith, some of the members have questioned whether there should be Federal regulation
or we should have State-by-State determinations and State-byState reforms.
How would that affect a large fund like yours if you had State
reforms to deal with?
Mr. GREGORY SMITH. I have a two-part answer to that question,
if I may. One is the burden placed upon us in understanding and
getting a handle on 50 different States rules, it would be burdensome. It would impact our ability to be effective in our votes, and
to carry out what we believe our fiduciary duty is, which is to vote
those shares and participate in the proxy process.
The question, I think, is one that is extremely important and one
that certainly Colorado PERA hopes to get improvement on
through this process.
Ms. KILROY. Thank you. Mr. Brier, you were asked earlier to define excessive risk. Do you think it is appropriate for corporations
to set up a risk matrix and have a professional risk manager but
then repeatedly, over 30 times in 2 years, exceed those risk limits,
and in fact, when they are exceeded, just simply increase them and
fail to have that risk manager report to that corporate board?
Mr. BRIER. I think the most important answer to that question
is that through a market-based solution of enabling investors to get
access to majority voting and proxy access will enable them to get
a voice in the boardroom. That voice in the boardroom will focus
on long-term investors, like us, risk management.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00050

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

43
I do agree it is an area that one of the difficulties that long-term
investors have is removing directors. You can know that something
is wrong. You can have derelict directors. You can know that risk
management is not under control. You cannot remove them.
I think this market-based solution where long-term investors,
long-term holders with a significant number of shares who get access to the proxy, who can use the proxy card of management who
need to then go out and get a majority vote can get someone on
the board to address this risk management issue.
Chairman KANJORSKI. The gentleladys time has expired. Mr.
Peters?
Mr. PETERS. Thank you, Mr. Chairman. Thank you to the panelists. It has been a very interesting discussion and an important
issue as well.
I just want to address briefly some of my colleagues on the other
side who have used some of the rhetoric that this is somehow the
Federal Government interjecting itself in the management of companies, I just want to remind my colleagues that this is far from
that.
In fact, it is about empowering the people who actually own
these companies. I think we have forgotten who actually owns
these companies, and that is the shareholders.
To me, that is about as pure of a capitalistic system as you can
have, that you say the people who actually own capital actually
have a say as to how that capital is managed, and hold those managers accountable to manage it and to increase shareholder wealth.
This is not about Federal Government takeover. It is not about
the government mandating. It is about the people who actually own
these companies.
I know shareholders are very diverse, including people who are
in IRAs and 401(k)s and pension funds, who are investing their
hard-earned dollars hoping that they have some sort of security in
the future, and want to entrust that their managers actually have
their interests in mind and not any of the short-term interests.
I want to just touch on a couple of general themes that I have
heard through the debate and then one that I heard from most of
the panelists, that there has been a sea change in how boards are
starting to govern their companies, and they have been standing up
to CEOs and have been more active, and at the same time we are
also hearing that more boards are also adopting many of the practices that are in this bill and in the Shareholder Empowerment
Act, which I have authored.
Those companies that are standing up to CEOs, are more enlightened, do understand that good governance also is correlated
with good shareholder performance or good share performance, to
me that seems as if it is pretty good objective evidence that what
is in these bills as has been adopted voluntarily by companies, that
have boards that are more active in overseeing and holding their
management consistent, to me, that should be strong evidence that
we should extend it to all companies because this is has proven
good governance.
No one particular panelist, is that a fair assessment of why it
makes sense for us to move in this direction, because we actually

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00051

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

44
have objective data from those companies that are doing it, that it
does lead to better governance and better stock performance?
Mr. GREGORY SMITH. Certainly, the evidence that we see and are
pleased to have had enough success to be able to generate that
data.
Mr. CUTLER. I would say there are selective elements that you
are seeing broadly adopted. I think getting into areas such as a
regulated solution to board leadership, a regulated solution to risk
management, a Federal, not a State-based proxy access system,
and then as we have talked about on another occasion, the need
to address the efficiency and accuracy of the voting process, are
really important concepts.
Without that, we feel there are some additional problems with
the proxy access proposal.
Mr. ROBERT SMITH. I would just add the movement towards good
governance, there is a pervasive attitude to try to vilify current
CEOs at companies, but my observation has actually been that
CEOs within our membership organizations have been some of the
proponents of these changes and of good governance.
There is a trend towards good governance and many of these
same provisions are being implemented and do empower shareholders, but again, to legislate it so it is a one-size-fits-all on all
companies, it seems to go beyond that, and it takes away from
shareholders ability to actually decide what is best for their company.
Mr. PETERS. I take a little different view, the fact that if shareholders shouldevery company should have the opportunity to
make sure that the managers are caring for their interests and are
looking out for their interests.
It should not be just those companies that happen to be led by
a more enlightened CEO. We are hoping that shareholders from
every company have those protections. That is certainly what is the
goal of this legislation.
Mr. Cutler, we had a chance to meet earlier. I appreciate having
that opportunity. You did bring up some concerns about the way
elections could be hijacked.
If you would just briefly touch on that, and I would like to have
some response from some of the other panelists if they are equally
as concerned.
Mr. CUTLER. The elimination of broker vote, which our best data
would indicate that about 15 percent of our average companies are
owned on a retail basis, it has the prospect without improvements
in the communication process today that assures accuracy of both
the communication and voting process of reducing a number of
votes that would be cast in an annual election.
That coupled with relatively low thresholds for majority vote and
the ability to pool shares or borrow shares holds the prospect for
consortiums of a group of voters coming together to advance a special interest conclusion.
We are also concerned about the potential for borrowed shares
not being counted accurately, i.e., being double-counted potentially.
That is why we are very pleased, as I mentioned in my testimony,
that the SEC is looking at these issues.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00052

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

45
The last issue is the very strong position of proxy advisory firms
today. It is not a transparent process. There are some indeed conflicts in terms of understanding the vote, if you want to understand
that from a company point of view, and that you end up paying a
fee to get the information, and we think that consulting agreement
is a conflict with the actual voting process, and the ability of 30 to
40 percent of the shares being controlled on an institutional vote
by the recommendations
Mr. PETERS. I know my time is expiring. Could I just have a couple of responses from other folks as to their concerns? Mr. Rees or
the gentleman from Colorado, Mr. Smith?
Mr. REES. Yes. We believe that we need to have minimum standards in corporate governance to protect investors. Otherwise, you
will have a phenomenon where only those companies that have
good corporate governance are adopting reforms, like separating
the chairman and CEO, majority voting and proxy access, and
those that are entrenched in unresponsive boards will be the ones
that resist those reforms.
That is why we need minimum standards. Thank you.
Mr. GREGORY SMITH. I believe also that the borrowed shares
issue is one that has been and is being dealt with by the SEC. It
does not present a threat. The hedge fund risk or the claim that
the raiders will use proxy access to disrupt companies, I think that
is dealt with both by the thresholds required, and the testimony I
provided regarding really where those volumes of shares could be
developed, as well as the holding period.
I do not think there are raiders that want to wait around 2 years
for their opportunity to get one board seat. It is just not a realistic
threat.
Mr. ROBERT SMITH. If I may, there are many opportunities where
boards are faced with long-term capital investments that do not
pan out in the short term, and if hedge funds and day traders and
people who have access to corporate votes have the opportunity to
get in and influence it, then that short-term time horizon can get
in the way of those long-term objectives and change the strategy
to an annual focus or something with a shorter time horizon than
a strategic plan would have.
Mr. GREGORY SMITH. Ultimately, they would require a majority
of the vote in order to accomplish that. We would still be protected.
Mr. PETERS. I yield back. Thank you, Mr. Chairman.
Chairman KANJORSKI. Thank you very much, Mr. Peters. Thank
you, Ms. Kilroy. The two of you have done really admirable work
in this field of governance.
The subcommittee chairman wants to thank you. I know the
chairman of the full committee wants to thank you. We are looking
forward to further hearings on this subject. Thank you.
To the panel, we want to thank you for being here. I have one
or two notes I have to make before we recess to dismiss you.
The Chair notes that some members may have additional questions for this panel, which they may wish to submit in writing.
Without objection, the hearing record will remain open for 30 days
for members to submit written questions to these witnesses and to
place their responses in the record.

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00053

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

46
Before we adjourn, the following written statements will be made
a part of the record of this hearing: Carl C. Icahn; Tom Gardner,
on behalf of Motley Fool; the Investment Company Institute; and
Susan F. Schultz, president, the board institute, Inc. Without objection, it is so ordered.
Mr. CASTLE. Mr. Chairman, I have a letter which we all had received dated April 20, 2010, to you and Ranking Member Garrett
from a series of entities in opposition to some of this legislation. I
will not read them all: American Insurance Association; Americans
for Tax Reform; Business Roundtable; the U.S. Chamber of Commerce, etc. I would ask that this be made with unanimous consent
part of the record, if we may.
Chairman KANJORSKI. Without objection, it is so ordered.
Any other submissions for the record? We have completed everything?
[No response.]
Chairman KANJORSKI. I want to thank this panel. I hope we did
not pick on anyone in particular, but I gained a lot of insight from
you all. I am certain now we have more confusing time to spend
to resolve this, but we will.
Thank you very much for your public service. We really do appreciate it.
Thank you and the subcommittee stands adjourned.
[Whereupon, at 12:27 p.m., the hearing was adjourned.]

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00054

Fmt 6633

Sfmt 6633

K:\DOCS\57743.TXT

TERRIE

APPENDIX

April 21, 2010

(47)

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00055

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00056

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.001

48

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00057

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.002

49

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00058

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.003

50

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00059

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.004

51

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00060

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.005

52

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00061

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.006

53

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00062

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.007

54

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00063

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.008

55

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00064

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.009

56

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00065

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.010

57

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00066

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.011

58

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00067

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.012

59

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00068

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.013

60

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00069

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.014

61

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00070

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.015

62

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00071

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.016

63

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00072

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.017

64

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00073

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.018

65

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00074

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.019

66

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00075

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.020

67

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00076

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.021

68

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00077

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.022

69

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00078

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.023

70

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00079

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.024

71

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00080

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.025

72

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00081

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.026

73

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00082

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.027

74

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00083

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.028

75

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00084

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.029

76

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00085

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.030

77

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00086

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.031

78

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00087

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.032

79

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00088

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.033

80

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00089

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.034

81

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00090

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.035

82

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00091

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.036

83

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00092

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.037

84

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00093

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.038

85

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00094

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.039

86

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00095

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.040

87

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00096

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.041

88

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00097

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.042

89

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00098

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.043

90

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00099

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.044

91

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00100

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.045

92

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00101

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.046

93

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00102

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.047

94

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00103

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.048

95

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00104

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.049

96

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00105

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.050

97

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00106

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.051

98

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00107

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.052

99

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00108

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.053

100

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00109

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.054

101

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00110

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.055

102

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00111

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.056

103

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00112

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.057

104

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00113

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.058

105

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00114

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.059

106

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00115

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.060

107

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00116

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.061

108

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00117

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.062

109

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00118

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.063

110

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00119

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.064

111

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00120

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.065

112

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00121

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.066

113

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00122

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.067

114

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00123

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.068

115

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00124

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.069

116

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00125

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.070

117

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00126

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.071

118

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00127

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.072

119

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00128

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.073

120

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00129

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.074

121

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00130

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.075

122

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00131

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.076

123

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00132

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.077

124

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00133

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.078

125

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00134

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.079

126

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00135

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.080

127

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00136

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.081

128

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00137

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.082

129

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00138

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.083

130

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00139

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.084

131

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00140

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.085

132

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00141

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.086

133

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00142

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.087

134

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00143

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.088

135

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00144

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.089

136

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00145

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.090

137

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00146

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.091

138

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00147

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.092

139

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00148

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.093

140

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00149

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.094

141

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00150

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.095

142

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00151

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.096

143

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00152

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.097

144

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00153

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.098

145

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00154

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.099

146

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00155

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.100

147

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00156

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.101

148

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00157

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.102

149

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00158

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.103

150

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00159

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.104

151

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00160

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.105

152

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00161

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.106

153

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00162

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.107

154

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00163

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.108

155

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00164

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.109

156

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00165

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.110

157

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00166

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.111

158

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00167

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.112

159

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00168

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.113

160

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00169

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.114

161

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00170

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.115

162

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00171

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.116

163

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00172

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.117

164

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00173

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.118

165

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00174

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.119

166

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00175

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.120

167

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00176

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.121

168

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00177

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.122

169

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00178

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.123

170

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00179

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.124

171

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00180

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.125

172

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00181

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.126

173

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00182

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.127

174

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00183

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.128

175

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00184

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.129

176

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00185

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.130

177

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00186

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.131

178

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00187

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.132

179

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00188

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.133

180

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00189

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.134

181

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00190

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.135

182

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00191

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.136

183

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00192

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.137

184

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00193

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.138

185

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00194

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.139

186

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00195

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.140

187

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00196

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.141

188

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00197

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.142

189

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00198

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.143

190

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00199

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.144

191

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00200

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.145

192

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00201

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.146

193

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00202

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.147

194

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00203

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.148

195

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00204

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.149

196

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00205

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.150

197

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00206

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.151

198

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00207

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.152

199

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00208

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.153

200

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00209

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.154

201

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00210

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.155

202

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00211

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.156

203

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00212

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.157

204

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00213

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.158

205

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00214

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.159

206

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00215

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.160

207

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00216

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.161

208

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00217

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.162

209

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00218

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.163

210

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00219

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.164

211

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00220

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.165

212

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00221

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.166

213

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00222

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.167

214

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00223

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.168

215

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00224

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.169

216

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00225

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.170

217

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00226

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.171

218

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00227

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.172

219

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00228

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.173

220

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00229

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.174

221

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00230

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.175

222

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00231

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.176

223

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00232

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.177

224

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00233

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.178

225

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00234

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.179

226

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00235

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.180

227

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00236

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.181

228

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00237

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.182

229

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00238

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.183

230

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00239

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.184

231

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00240

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.185

232

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00241

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.186

233

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00242

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.187

234

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00243

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.188

235

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00244

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.189

236

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00245

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.190

237

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00246

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.191

238

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00247

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.192

239

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00248

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.193

240

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00249

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.194

241

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00250

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.195

242

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00251

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.196

243

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00252

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.197

244

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00253

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.198

245

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00254

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.199

246

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00255

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.200

247

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00256

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.201

248

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00257

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.202

249

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00258

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.203

250

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00259

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.204

251

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00260

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.205

252

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00261

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.206

253

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00262

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.207

254

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00263

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.208

255

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00264

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.209

256

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00265

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.210

257

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00266

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.211

258

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00267

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.212

259

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00268

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.213

260

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00269

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.214

261

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00270

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.215

262

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00271

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.216

263

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00272

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.217

264

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00273

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.218

265

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00274

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.219

266

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00275

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.220

267

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00276

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.221

268

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00277

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.222

269

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00278

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.223

270

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00279

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.224

271

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00280

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.225

272

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00281

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.226

273

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00282

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.227

274

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00283

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.228

275

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00284

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.229

276

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00285

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.230

277

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00286

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.231

278

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00287

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.232

279

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00288

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.233

280

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00289

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.234

281

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00290

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.235

282

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00291

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.236

283

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00292

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.237

284

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00293

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.238

285

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00294

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.239

286

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00295

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.240

287

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00296

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.241

288

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00297

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.242

289

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00298

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.243

290

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00299

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.244

291

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00300

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.245

292

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00301

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.246

293

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00302

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.247

294

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00303

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.248

295

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00304

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.249

296

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00305

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.250

297

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00306

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.251

298

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00307

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.252

299

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00308

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.253

300

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00309

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.254

301

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00310

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.255

302

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00311

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.256

303

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00312

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.257

304

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00313

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.258

305

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00314

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.259

306

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00315

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.260

307

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00316

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.261

308

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00317

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.262

309

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00318

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.263

310

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00319

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.264

311

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00320

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.265

312

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00321

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.266

313

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00322

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.267

314

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00323

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.268

315

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00324

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.269

316

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00325

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.270

317

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00326

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.271

318

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00327

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.272

319

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00328

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.273

320

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00329

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.274

321

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00330

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.275

322

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00331

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.276

323

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00332

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.277

324

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00333

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.278

325

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00334

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.279

326

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00335

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.280

327

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00336

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.281

328

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00337

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.282

329

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00338

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.283

330

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00339

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.284

331

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00340

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.285

332

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00341

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.286

333

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00342

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.287

334

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00343

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.288

335

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00344

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.289

336

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00345

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.290

337

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00346

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.291

338

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00347

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.292

339

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00348

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.293

340

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00349

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.294

341

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00350

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.295

342

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00351

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.296

343

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00352

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.297

344

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00353

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.298

345

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00354

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.299

346

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00355

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.300

347

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00356

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.301

348

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00357

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.302

349

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00358

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.303

350

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00359

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.304

351

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00360

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.305

352

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00361

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.306

353

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00362

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.307

354

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00363

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.308

355

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00364

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.309

356

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00365

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.310

357

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00366

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.311

358

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00367

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.312

359

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00368

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.313

360

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00369

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.314

361

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00370

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.315

362

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00371

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.316

363

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00372

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.317

364

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00373

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.318

365

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00374

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.319

366

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00375

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.320

367

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00376

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.321

368

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00377

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.322

369

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00378

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.323

370

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00379

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.324

371

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00380

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.325

372

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00381

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.326

373

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00382

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.327

374

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00383

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.328

375

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00384

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.329

376

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00385

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.330

377

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00386

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.331

378

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00387

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.332

379

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00388

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.333

380

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00389

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.334

381

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00390

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.335

382

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00391

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.336

383

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00392

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.337

384

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00393

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.338

385

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00394

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.339

386

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00395

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.340

387

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00396

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.341

388

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00397

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.342

389

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00398

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.343

390

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00399

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.344

391

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00400

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.345

392

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00401

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.346

393

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00402

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.347

394

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00403

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.348

395

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00404

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.349

396

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00405

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.350

397

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00406

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.351

398

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00407

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.352

399

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00408

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.353

400

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00409

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.354

401

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00410

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.355

402

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00411

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.356

403

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00412

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.357

404

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00413

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.358

405

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00414

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.359

406

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00415

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.360

407

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00416

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.361

408

VerDate Nov 24 2008

17:01 Sep 14, 2010

Jkt 057743

PO 00000

Frm 00417

Fmt 6601

Sfmt 6601

K:\DOCS\57743.TXT

TERRIE

57743.362

409